President Bush has approved the merger of U.S. telecommunications manufacturer Lucent with France's Alcatel.
Mr. Bush on Friday accepted the recommendation of the Committee on Foreign Investment in the United States that he not suspend or prohibit the merger.
The merger was complicated by Lucent's involvement in classified research and development contracts with the U.S. government.
Alcatel said it would create a separate unit run by Americans to handle those contracts.
The merger deal, announced in April, would create one of the world's largest suppliers of network hardware and software for mobile and high-speed Internet communications.
The White House said the president's approval of the merger demonstrates the commitment of the United States to protect its national security interests while maintaining its openness to investment, including overseas investment.
Some information for this report was provided by AFP and Reuters.