Tyco to Buy Lucent Unit for $2.5 Billion
NEW YORK (Reuters) - Telecommunications equipment maker Lucent Technologies Inc. (NYSE:LU - news) said on Monday it agreed to sell its power systems business, which makes back-up batteries and other power components, to Tyco International Ltd. (NYSE:TYC - news) for $2.5 billion in cash.
Tyco, which makes products ranging from undersea telecommunications networks to fire protection systems and disposable medical products, said it expects the deal to immediately boost its profits after closing.
The unit, which makes switching power supplies, batteries and back-up power systems for the computer industry and telecommunications networks, has about 4,700 workers mostly in Mesquite Texas, and Matamoros, Mexico.
Lucent will purchase products from the unit under a multi-year supply agreement with Bermuda-based manufacturing conglomerate Tyco.
The sale is part of Lucent's effort to focus on its wireless and Internet businesses and shed non-core units. Murray Hill, N.J.-based Lucent has been working to cut costs and restructure its operations after sales and profit shortfalls and several manufacturing and product development errors.
To fund the acquisition, Tyco said it launched a zero-coupon convertible debt offering with anticipated gross proceeds of about $2 billion. The sale, which is subject to regulatory approval, is expected to close by year-end. Lucent will record an unspecified gain as part of the deal.
Shares of Tyco closed at $52-15/16, down $1-1/4, on the New York Stock Exchange. Shares of Lucent closed at $22-3/4, up 7/8, on the NYSE. |
