Alcatel shareholders have been urged by a French advisory group to reject the proposed merger with Lucent Technologies, citing unfavorable financial and corporate governance terms.Proxinvest, which provides services for institutional investors holding shares in the French company, said strategic aspects of the deal make sense, but that the financial terms appear "quite unfavorable" to Alcatel shareholders and that the corporate governance conditions are "very disappointing."The group is against removing the age limit for the position of chairman, and a rule that a two-thirds majority of directors would be needed to dismiss the chairman or chief executive officer (CEO) of the combined company. It made its recommendation in a letter to fund managers published on its website earlier this week.Proxinvest\u2019s views are at odds with that of a U.S. advisory group, Institutional Shareholder Services, which supports the deal. Lucent and Alcatel shareholders are due to vote on the merger Sept. 7.In the United States, meanwhile, a group of shareholders is trying to block the Lucent shareholder vote, arguing that the company\u2019s board of directors is failing to maximize shareholder value. A New Jersey Superior Court judge will consider on Sept. 6 whether to grant an injunction blocking the vote, according to a filing by Lucent with the U.S. Securities and Exchange Commission on Tuesday. Lucent called the action without merit.The European Commission and the U.S. Federal Trade Commission have approved the merger, which was announced in April. The networking equipment vendors, which sell optical core switches, DSLAMs (digital subscriber line access multiplexers) and other networking gear, would have had combined revenue of US$25 billion for 2005.If the merger goes ahead, Lucent Chairman and CEO Pat Russo will become CEO of the company, which would be renamed Alcatel Lucent. Serge Tchuruk, chairman and CEO of Alcatel, would become its nonexecutive chairman. The merger would create a networking giant that will compete with Siemens and Telefonaktiebolaget LM Ericsson, among others. Lucent has a strong foothold in North America, while Alcatel has a strong customer base in Europe. The proposed merger comes after increased competition has put pressure on both companies\u2019 bottom lines. For its fiscal third quarter ending June 30, Lucent reported revenue of US$2.04 billion, compared with $2.14 billion in the previous quarter and $2.34 billion in the same quarter a year ago. Lucent attributed the decline to slower sales in North America and China.Alcatel\u2019s net income dropped for its second quarter to 180 million euros\u00a0(US$226 million as of June 30, the last day of the period reported) from 196 million euros\u00a0a year earlier. Its net revenue increased to 3.4 billion euros, from 3.1 billion a year earlier.-Jeremy Kirk, IDG News Service (London Bureau)Related Links:\n\nAlcatel, Lucent Unveil Merged Name\n\nE.U. Clears Alcatel-Lucent MergerCheck out our CIO News Alerts and Tech Informer pages for more updated news coverage.