CNET.COM:ÿ Alcatel may buy Newbridge Networks .Announcement as early as Tuesday.
ÿThe source close to Newbridge said Alcatel's current offer on the tableÿ
is "significantly higher" than the company's current stock price.
The source said Terrence Matthews, Newbridge's chief executive,
ÿtalked about a potential takeover two weeks ago.
ÿ "Heÿ told associates that he likes the price, and ifÿ
he likes the price,ÿ they'll like the price,"ÿ
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ÿÿÿ yahoo.cnet.com
ÿ Alcatel may buy Newbridge Networksÿ
ÿÿÿ By Wylie Wong
ÿÿÿ Staff Writer, CNET News.com
ÿÿÿ February 18, 2000, 2:45 p.m. PTÿ
ÿÿÿ French phone equipment maker Alcatel is in serious discussions to purchaseÿ
ÿÿÿ Canadian networking firm Newbridge Networks,
ÿÿÿ sources say.ÿ
ÿÿÿÿ A deal--worth more than $6 billion--could be announced as early as Tuesdayÿ
ÿÿÿÿ when Newbridge reports its quarterly earnings,ÿ
ÿÿÿÿÿ
ÿÿÿÿ sources withinÿ Newbridge said today.ÿ
ÿÿÿ "There's no completed deal yet, and until then, anything can happen
ÿÿÿÿ and there's nothing to announce," said the source, who added that
ÿÿÿ negotiations could last beyond Tuesday.ÿ
ÿÿÿ "But it looks like we had a good quarter,ÿ and to a suitor, that has to look good.
ÿÿÿ And if it doesn't work out, we're willing to stay independent and
ÿÿÿ willing to build ourselves back as a company on the rebound."ÿ
ÿÿÿ Alcatel and Newbridge representatives declined comment on the potential takeover.ÿ
ÿÿÿ Newbridge, which has financially struggled lately, has discussed buyouts withÿ
ÿÿÿ several companies in the last few months,
ÿÿÿ the source said. The source declined to name the suitors.ÿ
ÿÿÿ Published reports have speculated that Germany's Siemens and Sweden's Ericsson
ÿÿÿÿ have been among the companies interested.ÿ
ÿÿÿ
ÿSimilar to those firms, Alcatel would be interested in Newbridge because
ÿ the company has developed a set of high-end
ÿ Internet-based equipment for voice and data traffic--something the
ÿ French phone equipment maker lacks.ÿ
ÿ
ÿThe source close to Newbridge said Alcatel's current offer on the tableÿ
ÿÿ is "significantly higher" than the company's
ÿÿ current stock price. Newbridge currently has a market value of $5.9 billion.ÿ
ÿThe source said Terrence Matthews, Newbridge's chief executive,ÿ
ÿÿ talked about a potential takeover two weeks ago.
ÿ "He told associates that he likes the price, and if he likes the price,ÿ
ÿÿ they'll like the price,"ÿ the source said.ÿ
ÿÿ For Alcatel, buying Newbridge will help it in its quest to tackle
ÿÿ the North American market. The French phone equipment
ÿÿ maker is one of several international companies hoping to compete
ÿÿ against domestic leaders like Cisco Systems,
ÿÿ Lucent Technologies and Nortel Networks in supplying serviceÿ
ÿÿÿ providers and businesses the equipment they need to
ÿÿ build faster networks.ÿ
ÿÿÿ For Newbridge, a one-time leader in the networking market, theÿ
ÿÿÿ acquisition will end several years of executive turnover and financial struggles.
ÿÿÿ The company has had seven profit warnings in the last three years.ÿ
ÿÿÿÿ "Alcatel would rescue them from the wrenches of volatile management,ÿ
ÿÿÿ lack of focus and lack of money," Cahners In-Stat Group analyst Laurie
ÿÿÿ Gooding said.ÿ "They've got great products. Customers like them, butÿ
ÿÿÿ they can't seem to get their act together."ÿ
ÿÿÿ Newbridge builds asynchronous transfer mode (ATM) technology, which sendsÿ
ÿÿÿ voice and data signals over networks at high speeds. The
ÿÿÿ company sells ATM-based high-speed routers and is developing products in the
ÿÿÿ emerging high-speed Internet access market, including digital
ÿÿÿ subscriber line (DSL) technology.ÿ
ÿÿÿ Since November, Newbridge's shares have jumped from about $20 to about $35
ÿÿÿ as investors speculated that a buyout was imminent.ÿ
ÿÿÿ Newbridge executives in mid-November said the company would be open to
ÿÿÿ a takeover after it announced a restructuring that included cutting
ÿÿÿ about 700 employees, or 10 percent of the work force, and plans to outsource itsÿ
ÿÿÿ manufacturing and customer service operations to cut costs.ÿ
ÿÿÿ Alcatel has invested heavily in the past year to enter the North American market. Alcatel hasÿ
ÿÿÿ spent about $7 billion the last two years to acquire
ÿÿÿ five U.S.-based networking companies, including Xylan, Packet Engines and Internet Devices.
ÿÿÿ The company also recently created a $150 million
ÿÿÿ investment fund to invest in U.S.-based start-ups.ÿ |
