From the Financial Times
Global Crossing talks to Equant
By Juliana Ratner and Dan Roberts, Telecommunications Correspondent
Published: June 13 2000 20:52GMT | Last Updated: June 13 2000 21:01GMT
Global Crossing is in talks to buy Equant, a telecommunications network company that started out as an airline reservation system, after rival France Telecom lost its exclusive right to negotiate with the company.
Both Global Crossing and France Telecom have made approaches to Equant and its majority shareholder, a foundation controlled by airlines, although neither has put a formal offer on the table.
Any deal is likely be worth more than $10bn, Equant's current market value. Equant's share price rose 8.9 per cent on Tuesday to E50.10, although it remains 43.6 per cent below its level 12 months ago. The company reported a loss of $24.6m in the first quarter of 2000.
Global Crossing is understood to be preparing an offer combining cash and shares. It was not known what France Telecom would offer.
Equant is based in Atlanta and Amsterdam and listed in New York and Paris. The company is considered an attractive takeover candidate because its global network in 220 countries and territories is rewired for high-speed data transmission.
Global Crossing wants Equant's geographic reach. Buying the company would help it keep up with competitors such as MCI WorldCom and Concert, the venture between AT&T and British Telecommunications. Global Crossing could cut costs because Equant currently leases some of its cables.
If Global Crossing were to make a successful bid for Equant, the US group might become more attractive to Deutsche Telekom. The German company is rumoured to be interested in making a bid for Global Crossing.
Pascal Aguirre, a telecoms consultant at Renaissance Strategies, said: "This would be a killer combo for Global Crossing. The synergies certainly look stronger than they do for France Telecom."
France Telecom is interested in Equant to fill the gap left in its international data strategy following the unravelling of its Global One alliance with Deutsche Telekom and Sprint. France Telecom bought out its partners, but is looking to add to the business now it has control.
The Sita Foundation, a Belgian registered co-operative owned by the world's airlines, holds about 40 per cent of Equant's shares. Morgan Stanley Capital Partners owns about 7 per cent. Both bidders have held informal talks with Sita. Negotiations are expected to pick up this week, though it is believed that talks with Global Crossing are only a few days old and could still fall apart. Additional reporting by Richard Waters in New York
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