Financial Times ; 21-Feb-2000: Alcatel... is close to acquiring ... Newbridge Networks.ÿ
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COMPANIES & FINANCE: INTERNATIONAL:ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel close
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to sealing deal on Newbridge
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Financial Times ; 21-Feb-2000 12:00:00 am
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel, the French telecoms equipment maker, is close to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ acquiring the Canadian group Newbridge Networks.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The acquisition, which could be announced tomorrow or
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Wednesday, would give Alcatel a stronger position in the market
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ for switches for the current generation of data networks.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge shares fell almost 8 per cent on Friday to Dollars 32
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 3/4 in New York on news that the deal would be valued at about
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Dollars 6.5bn, or roughly Dollars 36 per share. Alcatel shares fell
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 4 3/16 to Dollars 47 3/8. But analysts said that Newbridge, which
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ reports its earnings late tomorrow, is letting it be known that it
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ expects the price to be higher, indicating that the two sides are
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ still haggling over the terms of the deal.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "Newbridge folks say they want it in the low 40s and they're pretty
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ confident they'll get it," said Jim Kedersha, analyst with SG
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Cowen. An offer of Dollars 40 per share would be worth just over
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Dollars 7.2bn.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge, which boasts the world's best-selling ATM switch for
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ business networks, put itself up for sale last November after
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ failing to meet its earnings' targets for the sixth time in the last 10
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ quarters. The company is also a leader in high-speed wireless
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ data transmission. But it has suffered from serious management
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ problems and the rapid decline of its older, higher-margin
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ voice-switching business.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel has been scrambling to beef up its ability to produce the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ next generation of data-based networks, and in the last two years
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ has acquired DSC, Xylan and Assured Access Technology. But
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Alcatel has yet to acquire the full array of data networking
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ products that most carriers are demanding.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿ ÿ "They're getting desperate and they should be worried because
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the voice business is going to drop off a cliff," said Michael
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Urlocker, analyst with Scotia Capital Markets in Toronto.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The acquisition would give Alcatel a foothold in the North and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ South American markets, which generate about half of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Newbridge's revenue. |
