ÿ BLOOMBERG ( UPDATE 3 ) :Alcatel's Purchase of Newbridge May Come Next Weekÿ
quote.bloomberg.com
Alcatel's Purchase of Newbridge May
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Come Next Week (Update3)
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ By Erik Schatzker
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel's Purchase of Newbridge May Come Next Week (Update3)ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ (Adds Newbridge's market value in 7th paragraph.)ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Paris, Feb. 19 (Bloomberg) -- Alcatel SA, Europe's second-
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ largest phone-equipment maker, may announce by Wednesday that
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ it will buy Newbridge Networks Corp., a person familiar with
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the companies' plans said.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge, a Canadian phone-equipment maker that put
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ itself up for sale in November, may fetch about $40 a share,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ or $7.33 billion, Chase H&Q analyst Mike Neiberg said. The
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ companies are haggling over price, and Ericsson AB or Siemens
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ AG, which have talked with Newbridge, could step forward as
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ partners if talks fail, the person said.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The companies want to wrap up the agreement before
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge shares begin trading on Wednesday, the person said
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ late Friday. Newbridge, which reports earnings on Tuesday, has
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ told analysts that it could beat forecasts of 11 cents a
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ share. That could lift the stock and make a purchase more
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ expensive for Alcatel.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ``Alcatel would probably be happy to see Newbridge stock
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ go up a bit to dispel the notion that what they're buying is
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ damaged,' said Jim Kedersha, an analyst at SG Cowen. ``But
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ not too much because they'd have to pay more.'ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge, Alcatel and Ericsson officials declined to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ comment. Siemens spokesman Peter Gottal said the company isn't
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ in talks with Newbridge.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel's negotiations with Newbridge were reported by
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the Globe and Mail and the Wall Street Journal.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge shares fell 2 1/2 to 32 7/8 in New York Stock
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Exchange trading, giving the company a market value of $5.8
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ billion. They've risen 46 percent this year on speculation of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ a sale. Alcatel fell 4 3/16 to 47 3/8.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel's Spreeÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel has spent $8.5 billion in the past 17 months to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ add equipment and software for data networking and Internet
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ access. Still, the Paris company is lagging in sales to North
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ American phone companies, which prefer the asynchronous
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ transfer mode, or ATM, switches that Newbridge, Lucent
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Technologies Inc., Cisco Systems Inc. and Nortel Networks
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Corp. sell.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge would give Alcatel the ATM switches, which
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ deliver voice, data and video on a single network, as well as
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ customers such as SBC Communications Inc. and Cable &
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Wireless
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Plc.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ``The Europeans are behind the North Americans in this
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ market,' Neiberg said. ``They need to make an acquisition to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ get in and Newbridge is the only major target left.'ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge founder Terry Matthews, who also is chairman
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ and chief executive, put the company on the block on Nov. 18
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ after warning in six of the past nine quarters that earnings
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ would fall short of analyst forecasts and losing market share
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to Lucent. Tellabs Inc. held preliminary talks to buy
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge in March. Those discussions fell through.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Some analysts were skeptical that Newbridge will do much
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to improve Alcatel's business, because the industry is moving
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to networks that run on Internet-based technology.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ``Newbridge would give them a great position in the ATM
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ market, but it's a short-term fix,' said Eric Burkel, an
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ analyst at Handelsbanken Markets.ÿ |
