Alcatel shareholders could this week derail the company's $13.4bn (€10.5bn) merger with rival telecoms equipment group Lucent, amid growing criticism of the deal's terms.

Large French institutions are set to align themselves with a critical report by Proxinvest, a Paris-based proxy voting agency, which says Alcatel shareholders are overpaying for Lucent. Proxinvest advises the French asset management industry, which forms a large part of Alcatel's share register. Alcatel shareholders will vote on the deal on Thursday. Proxinvest's head Pierre-Henri Leroy said: "We believe the agreement, which at the moment values Alcatel shares at about five times those of Lucent, should be closer to seven to one. This deal is being diluted in an unfair manner and is too expensive for Alcatel shareholders. They deserve better." Per Lindberg, an analyst at Dresdner Kleinwort, said Lucent's pension fund deficit, an issue of dispute for Alcatel's shareholders, could have been undervalued by as much as $5bn.