French communications-equipment maker Alcatel said on Sunday it would buy smaller U.S. rival Lucent Technologies Inc. for $13.4 billion to gain market heft and broaden its product mix. Alcatel will control 60% of the new company and Lucent chief executive officer Patricia Russo will be CEO, the companies said yesterday.

Alcatel and Lucent, said about 10% of the combined workforce, or 8,800 jobs, will be eliminated to help achieve annual savings of 1.4 billion euros ($1.7 billion) within three years.



The two equipment makers, whose merger talks failed five years ago, agreed to combine after being unable to revive sales or their share prices since the technology bubble burst.

The new company will have annual sales of about $25 billion, less than half their combined revenue in 1999, big enough to surpass Ericsson AB, the No. 1 maker of wireless networks, and to challenge Cisco Systems, the largest maker of computer networking gear.

Combined, Alcatel and Lucent, the biggest U.S. maker of telephone equipment, have a market value of about $36 billion. The companies expect the transaction to be completed in six to 12 months.

The companies would also wield greater clout to negotiate prices with customers and enjoy a broader research and development base.