The boards of Alcatel and Lucent are due to meet today to consider a $32 billion (#37 billion) merger of the two telecommunications equipment companies.

It would amount to the biggest European acquisition of a US technology concern.

News of the deal could be followed by a big public share sale by Lucent, which will need to plug a hole in its finances while the merger awaits regulatory approval, according to one person close to the company.

The French and US groups were still negotiating the final merger details yesterday, said people close to the talks.

Barring last-minute obstacles, they appeared on track to meet a timetable allowing their boards to vote on the deal today, followed by a formal announcement tomorrow.

Though billed as a merger of equals, the combination would amount to a takeover by Alcatel of the struggling US company.

The merged company's management team would be headed by Mr Serge Tchuruk, chairman of Alcatel.

The merged company would continue to be a French concern and Alcatel's stock would be used as the currency for the deal.

Even as the merger talks have come to a head, Lucent has been exploring ways to raise extra cash.

It has promised its bankers it will raise at least $2.5 billion by September.

Lucent has been engaged in an auction of its optical fibre business as a way of meeting this target.

However, a merger agreement with Alcatel could be followed by a move to issue new shares instead.

The company may also issue convertible bonds, taking advantage of Wall Street's current appetite for these securities, one person close to the company said.

Whilst exploring these moves, Lucent has not ruled out selling the fibre business to another buyer such as Pirelli.

Winning regulatory approval for the deal could take a year or more, given the big share the combined company would have in some parts of the sector.

Some industry observers also believe Alcatel would not be allowed to take control of Bell Laboratories, Lucent's highly regarded R&D arm.