Alcatel is in talks to buy telecoms equipment manufacturer Lucent Technologies for $40bn in a nearly all-stock deal, according to US sources.
Alcatel said that the two companies have a 50-50 chance of taking their discussions through to a formal level and sealing a deal. If they can agree terms, a deal could be announced by early June.
The deal would give Alcatel, which is Europe's fourth biggest telco equipment manufacturer, a significant US presence.
The current price being floated for Lucent is around $40bn, mostly in stock, which is around 20 per cent higher than the company's current value of $33.5bn.
Although Alcatel is the suitor, analysts point out that it isn't much bigger than Lucent, weighing in at about $36.5bn.
Even if the discussions don't go ahead, Alcatel said it would still bid for Lucent's fibre and cable unit, which Lucent plans to sell off separately for between $4bn and $6bn in a bid to reduce debt.
If the deal does go through, it would leave Alcatel/Lucent in a stronger position to compete against networking giants Nortel and Cisco. Shares in Alcatel have dropped by 43 per cent this year and Lucent shares have fallen by 27 per cent. Neither manufacturer would comment on the negotiations.
IBM and Technical University of Munich team demonstrate how Shor's algorithm, which can't be cracked by conventional computers, can be solved quickly with quantum computing
Hubble Space Telescope finds superflares from young red dwarfs could strip away planetary atmosphere
Younger stars are 100 to 1,000 times more energetic than when they're older
Two of the big four supermarkets will use the system to control sales of restricted products
PUBG news and updates: November's Update #23 to bring new Skorpion pistol and changes to blue zone visibility
Genuinely useful side-arm coming to PUBG in Update #23