From FP...
Alcatel said split over
Newbridge purchase
CEO pushing: Sources
Jill Vardy
Financial Post
OTTAWA - The chief executive of Alcatel Alsthom SA is anxious
to buy Newbridge Networks Corp. but his senior executives aren't
convinced it's a good idea, sources say.
Serge Tchuruk, Alcatel's chairman and CEO, commissioned his
senior officials the week before Christmas to put together a report
on Newbridge. When the report was delivered to him in late
January, the officials recommended Alcatel not buy the Canadian
telecommunications equipment company.
However, sources say Mr. Tchuruk is committed to the purchase,
which would give Alcatel a larger presence in the growing North
American market for telecommunications equipment. Newbridge is
a top supplier of asynchronous transfer mode (ATM) equipment, a
product line in which Alcatel doesn't have a strong presence.
"He [Mr. Tchuruk] wants to be number one in something. And
buying Newbridge would make Alcatel a world leader in ATM, at
least for the time being," said one source close to the negotiations.
"His direct reports know they can't maintain market share [in
ATM], that it's sure to drop ... but he wants to buy it."
Sources close to Newbridge say about 20 Alcatel officials were in
Newbridge's headquarters last week for meetings with Terry
Matthews, Newbridge's chairman and CEO, and a few senior
Newbridge representatives.
Siemens AG and Ericsson SA, big European telecom vendors who
have reportedly looked at Newbridge, are not in active talks with
the firm, sources believe.
Neither Newbridge nor Alcatel will comment on market rumours
the two companies are in takeover negotiations.
Alcatel is the company considered the most likely buyer of
Newbridge, the troubled Canadian telecommunications equipment
maker that announced Nov. 18 it is open to all strategic options --
including a takeover -- to ensure its survival.
Investors are growing increasingly nervous that Newbridge won't
announce a deal before its earnings for the third quarter ended Jan.
31 are announced on Feb. 22. Newbridge shares closed down 35½
at $48.40 on the Toronto Stock Exchange after going as low as
$45.50.
Most observers believe a deal is imminent, but it's not clear if
negotiations will be wrapped up before Feb. 22. A board meeting is
scheduled for that day to approve the earnings report. No other
board meetings are scheduled before then.
Newbridge warned Nov. 2 that its earnings for the second quarter
ended Oct. 31 were less than half what analysts had expected.
Expectations for the third quarter are that the firm earned 11½ a
share.
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