(Reposted):CNET.COM:ÿ Alcatel may buy Newbridge Networks .Announcement as early as Tuesday.
Message 12917389
ÿÿÿÿÿ The source close to Newbridge said Alcatel's current offer on the tableÿ
ÿÿÿÿ is "significantly higher" than the company's current stock price.ÿ
ÿÿÿÿ The source said Terrence Matthews, Newbridge's chief executive,
ÿÿÿÿÿ talked about a potential takeover two weeks ago.
ÿÿÿÿÿÿ "Heÿ told associates that he likes the price, and ifÿ
ÿÿÿÿ he likes the price,ÿ they'll like the price,"ÿÿÿ
ÿÿÿÿ TA
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ÿÿÿÿÿÿÿÿ yahoo.cnet.com.
ÿÿÿÿÿÿ Alcatel may buy Newbridge Networksÿÿ
ÿÿÿÿÿÿÿÿ By Wylie Wong
ÿÿÿÿÿÿÿÿ Staff Writer, CNET News.com
ÿÿÿÿÿÿÿÿ February 18, 2000, 2:45 p.m. PTÿ
ÿÿÿÿÿÿÿÿ French phone equipment maker Alcatel is in serious discussions to purchaseÿ
ÿÿÿÿÿÿÿÿ Canadian networking firm Newbridge Networks,
ÿÿÿÿÿÿÿÿ sources say.ÿ
ÿÿÿÿÿÿÿÿÿÿÿ A deal--worth more than $6 billion--could be announced as early as Tuesdayÿÿ
ÿÿÿÿÿÿÿÿÿ when Newbridge reports its quarterly earnings,ÿÿ
ÿÿÿÿÿÿÿÿÿÿ
ÿÿÿÿÿÿÿÿÿ sources withinÿ Newbridge said today.ÿÿ
ÿÿÿÿÿÿÿÿ "There's no completed deal yet, and until then, anything can happen
ÿÿÿÿÿÿÿÿÿ and there's nothing to announce," said the source, who added that
ÿÿÿÿÿÿÿÿ negotiations could last beyond Tuesday.ÿ
ÿÿÿÿÿÿÿÿÿ "But it looks like we had a good quarter,ÿ and to a suitor, that has to look good.ÿ
ÿÿÿÿÿÿÿÿ And if it doesn't work out, we're willing to stay independent and
ÿÿÿÿÿÿÿÿ willing to build ourselves back as a company on the rebound."ÿ
ÿÿÿÿÿÿÿÿ Alcatel and Newbridge representatives declined comment on the potential takeover.ÿ
ÿÿÿÿÿÿÿÿ Newbridge, which has financially struggled lately, has discussed buyouts withÿ
ÿÿÿÿÿÿÿÿ several companies in the last few months,
ÿÿÿÿÿÿÿÿ the source said. The source declined to name the suitors.ÿ
ÿÿÿÿÿÿÿÿ Published reports have speculated that Germany's Siemens and Sweden's Ericsson
ÿÿÿÿÿÿÿÿÿ have been among the companies interested.ÿ
ÿÿÿÿÿÿÿÿ
ÿÿÿÿÿ Similar to those firms, Alcatel would be interested in Newbridge because
ÿÿÿÿÿÿ the company has developed a set of high-end
ÿÿÿÿÿÿ Internet-based equipment for voice and data traffic--something the
ÿÿÿÿÿÿ French phone equipment maker lacks.ÿÿ
ÿÿÿÿÿÿ
ÿÿÿÿÿÿÿ The source close to Newbridge said Alcatel's current offer on the tableÿ
ÿÿÿÿÿÿÿ is "significantly higher" than the company's
ÿÿÿÿÿÿÿ current stock price.ÿÿ Newbridge currently has a market value of $5.9 billion.ÿ
ÿÿÿÿÿÿÿ The source said Terrence Matthews, Newbridge's chief executive,ÿ
ÿÿÿÿÿÿÿ talked about a potential takeover two weeks ago.
ÿÿÿÿÿÿ "He told associates that he likes the price, and if he likes the price,ÿ
ÿÿÿÿÿÿÿ they'll like the price,"ÿ the source said.ÿÿ
ÿÿÿÿÿÿÿ For Alcatel, buying Newbridge will help it in its quest to tackle
ÿÿÿÿÿÿÿ the North American market. The French phone equipment
ÿÿÿÿÿÿÿ maker is one of several international companies hoping to compete
ÿÿÿÿÿÿÿ against domestic leaders like Cisco Systems,
ÿÿÿÿÿÿÿ Lucent Technologies and Nortel Networks in supplying serviceÿ
ÿÿÿÿÿÿÿÿ providers and businesses the equipment they need to
ÿÿÿÿÿÿÿ build faster networks.ÿ
ÿÿÿÿÿÿÿÿ For Newbridge, a one-time leader in the networking market, theÿ
ÿÿÿÿÿÿÿÿ acquisition will end several years of executive turnover and financial struggles.
ÿÿÿÿÿÿÿÿ The company has had seven profit warnings in the last three years.ÿ
ÿÿÿÿÿÿÿÿÿ ÿ "Alcatel would rescue them from the wrenches of volatile management,ÿ
ÿÿÿÿÿÿÿÿ lack of focus and lack of money," Cahners In-Stat Group analyst Laurie
ÿÿÿÿÿÿÿÿ Gooding said.ÿ "They've got great products. Customers like them, butÿ
ÿÿÿÿÿÿÿÿ they can't seem to get their act together."ÿÿÿ
ÿÿÿÿÿÿÿÿ Newbridge builds asynchronous transfer mode (ATM) technology, which sendsÿ
ÿÿÿÿÿÿÿÿ voice and data signals over networks at high speeds. The
ÿÿÿÿÿÿÿÿ company sells ATM-based high-speed routers and is developing products in the
ÿÿÿÿÿÿÿÿ emerging high-speed Internet access market, including digital
ÿÿÿÿÿÿÿÿ subscriber line (DSL) technology.ÿ
ÿÿÿÿÿÿÿÿ Since November, Newbridge's shares have jumped from about $20 to about $35
ÿÿÿÿÿÿÿÿ as investors speculated that a buyout was imminent.ÿ
ÿÿÿÿÿÿÿÿ Newbridge executives in mid-November said the company would be open to
ÿÿÿÿÿÿÿÿ a takeover after it announced a restructuring that included cutting
ÿÿÿÿÿÿÿÿ about 700 employees, or 10 percent of the work force, and plans to outsource itsÿ
ÿÿÿÿÿÿÿÿ manufacturing and customer service operations to cut costs.ÿ
ÿÿÿÿÿÿÿÿ Alcatel has invested heavily in the past year to enter the North American market. Alcatel hasÿ
ÿÿÿÿÿÿÿÿ spent about $7 billion the last two years to acquire
ÿÿÿÿÿÿÿÿ five U.S.-based networking companies, including Xylan, Packet Engines and Internet Devices.
ÿÿÿÿÿÿÿÿ The company also recently created a $150 million
ÿÿÿÿÿÿÿÿ investment fund to invest in U.S.-based start-ups.ÿ |
