Want CNET to notify you of price drops and the latest stories?

Lucent sets Avaya spin-off terms

Lucent Technologies (NYSE: LU) said Thursday it will spin off its $8 billion enterprise networks unit, Avaya Inc, by paying a special dividend to shareholders.

Shares in Lucent were down 0.88 to 43.50 Thursday morning. The stock has been under pressure since the company warned in July that its earnings and sales growth for the next two quarters will be lower than expected.

Lucent shareowners will receive one share of Avaya for every 12 shares of Lucent common stock and a cash payment for any fractional shares. The actual number of shares to be distributed will be based on the number of total Lucent shares outstanding on Sept. 20. As of Aug. 30, Lucent had about 3.3 billion shares outstanding.

The special stock dividend is expected to be payable on Sept. 30, to Lucent shareowners of record on Sept. 20. The distribution of Avaya shares on Sept. 30 will mark the deal's completion.

The dividend will be tax-free for federal income tax purposes, except where cash is received instead of fractional shares.