Alcatel Will Cut Its Holding in Thomson-CSF, Analyst Predicts
(my guess is ALA is rising $ to buy DWDM metro startup as reported earlier. On the ohter hand they are already sitting on 5 billion $ in cash)
Closed sharply up in Paris: 60.5 E ( 50 3/4 US) on strong voulume. Others techs on the old continent also went up strongly.
Paris, Nov. 23 (Bloomberg) -- Alcatel SA is likely to sell a chunk of its 25.3 percent stake in
defense electronics maker Thomson-CSF, probably 10 percent of the company initially, said
Philippe Gossard, an analyst at Credit Lyonnais in Paris.
Gossard made the forecast in a note to investors after Alcatel Chief Executive Serge Tchuruk
said his company needs either to raise its stake in Thomson-CSF to exploit better the
companies' ties, or sell a portion.
``This (the present stake) is either too little or too much,'' Tchuruk told reporters at a press
briefing Wednesday. ``It is a transition phase. I don't want to remain at that level. There are
things both companies can do together.''
Gossard noted that Alcatel's Thomson-CSF shares are on its balance sheet at 36 euros each.
At the current share price of about 51 euros, Alcatel could reap a 42 percent return on its
investment.
At the end of last year, Thomson-CSF had 167.7 million shares outstanding. Ten percent of
those, sold at 51 euros each, would bring Alcatel about 855.3 million euros ($722 million),
giving it a profit of 251.6 million euros.
``The present Thomson-CSF share price could provide a substantial revenue for Alcatel,''
Gossard said in the note.
``Additionally, we believe that the French government doesn't need to maintain the existing
shareholder structure to guarantee strategic activities of Thomson-CSF. First, the existing
golden share provides some protection. Second, the French government provided R&D
credits, which are, in this activity, strategic. Third, the French government remains one of the
first Thomson-CSF clients.''
Gossard concluded that a sale of Thomson-CSF shares by Alcatel is ``certain, it's just a
question of timing.'' He said Alcatel will probably sell 10 percent of Thomson-CSF first, on the
market, not to another company.
The French government sought in 1998 to sell a piece of Thomson-CSF to another French
company with defense assets, to create a defense technology company in France powerful
enough to play a key role as Europe's defense industry reorganized. Lagardere, which then
still owned Matra Hautes Technologies, had competed against Alcatel for the share.
Since then, France's Aerospatiale Matra SA has merged with DaimlerChrysler AG's Dasa
aerospace unit and with Construcciones Aeronauticas SA of Spain to form the European
Aeronautic, Defense & Space Co. Thomson-CSF bought Racal Electronics Plc and became
the third big European defense contractor.
Alcatel has focused recently on communications and Internet equipment, in competition with
companies such as Ericsson AB and Lucent Technologies Inc.
While Thomson-CSF is Europe's largest defense electronics maker, it now draws close to half
its sales from civilian electronics businesses. Alcatel has 51 percent and Thomson-CSF 49
percent of Alcatel Space, which makes military and commercial satellites.
Apart from Alcatel's stake in Thomson-CSF, the French government owns 34.4 percent,
Groupe Industriel Marcel Dassault 5.8 percent and employees about 2 percent. A third of the
shares are publicly traded. |
