France's Alcatel Forges Ahead With Plan to Shed Cable Operations
Dow Jones Online News, 10/9/2000 13:05
PARIS -(Dow Jones)- Alcatel SA said it is forging ahead with a plan to spin off and sell about half of its cable and components operations as part of its move to reshape itself into a telecommunications-equipment powerhouse.
Alcatel (ALA) said it has transferred its noncore cable businesses, such as traditional copper wires, into a new entity called Nexans, which it plans to float entirely before year end.
The French company last month won shareholder approval to introduce a tracking stock for its key optical components business, Alcatel Optronics. When the shares are listed later this month, they will be the first-ever tracking stock issued in Europe.
Nexans Chairman-designate Gerard Hauser said the unit will post pro forma revenue of 4.6 billion euros ($3.99 billion) this year and an operating profit of close to 4% of revenue.
Analysts pegged Nexans' stock-market value at four billion to five billion euros.
Nexans will rank third in the world cables industry behind Italy's Pirelli SpA and Japan's Sumitomo Corp., Mr. Hauser said. The new unit will have a work force of 18,500, compared with 34,500 for Alcatel's existing cable division.
Alcatel will retain control over fiber optic, submarine and high-frequency telecommunications cable operations.
Nexans will have a 10% debt-to-equity ratio, leaving it well-armed to pursue acquisitions in the U.S., Mr. Hauser said. Nexans wants to get involved in higher-margin fiber optic operations, he said.
"We aim to produce three million to five million kilometers a year of optic fiber cables by 2003," Mr. Hauser said.
The group's size will protect it from hostile takeover bids because competition authorities would likely reject any large-scale mergers in the cable industry, Mr. Hauser noted.
(Compiled from Dow Jones Newswires and other sources)
Copyright (c) 2000 Dow Jones & Company, Inc.
All Rights Reserved |
