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To: Techplayer who wrote (13460)	9/28/1999 11:05:00 AM
From: zbyslaw owczarczyk	Read Replies (1) \| Respond to of 18016

Alcatel to Acquire Genesys Telecommunications for US$1.5 Billion in Stock By Daniel Tilles Alcatel to Acquire Genesys for $1.5 Billion in Stock (Update3) (Rewrites from 7th paragraph, updates shares.) Paris, Sept. 28 (Bloomberg) -- Alcatel SA, Europe's second- biggest phone equipment maker, said it will acquire Genesys Telecommunications Laboratories Inc. for as much as $1.5 billion in stock to add a software company to its growing Internet and data-equipment businesses. Alcatel will pay 1.667 American Depositary Shares, about $46.67 based on a 10-day average ADS share price of $28, for each Genesys share. The price is 14.2 percent more than Genesys' close yesterday of 40 7/8. In the last year, Alcatel has spent more than $7 billion on acquisition of data-networking products to get ahead in the booming market for Internet-access equipment. It wants to make up for slowing sales in its traditional business of switches for voice-carrying telephone equipment. ``It continues their strategy of buying U.S. technology companies to take them into the multimedia world of information technology,' said Angela Dean, an analyst with Morgan Stanley Dean Witter, who rates the shares a ``strong buy.' ``It looks like a pretty good deal and not an outrageous price.' Alcatel shares fell as much as 4.8 euros, or 3.71 percent, to 124.6 euros ($130.66) in Paris trading. Genesys shares yesterday closed at 40 7/8, up 5/8, or 1.55 percent, in New York. In the past year, San Francisco-based Genesys' shares have gained more than 112 percent, while the Russell 2000 Technology Index has risen about 61 percent. Alcatel, which has a market value of about 25 billion euros ($26.2 billion), will issue new shares to pay for the acquisition. The purchase will depress earnings in its current financial year before adding to earnings from 2001, it said. Other Acquisitions The company, which makes software used by telephone call- centers, will still be headed by Chief Executive Ori Sasson and will be a stand-alone unit within Alcatel. In the year ended June 30, Genesys had sales of $140 million, an increase of 64 percent from the previous year. About 50 percent of the company's sales in 1998 were outside the U.S., Alcatel said. It will work principally with Alcatel's enterprise unit, which sells communication equipment to corporations, as well as the Alcatel division that develops and sells applications for telephone and data networks to phone companies and Internet service providers. The Genesys acquisition is the latest in a series of acquisitions since a company warning about profit last year knocked 38 percent off Alcatel's share price in a day. In June, it agreed to pay $180 million in cash for closely held Internet Devices Inc. Its equipment competes with gear from No. 1 computer-networking company Cisco Systems Inc. and lets corporations and phone companies manage their data networks more easily and secure their Internet communications. More Purchases Three months earlier, Alcatel offered $2 billion for Calabasas, California-based data-networking company Xylan Corp. It also agreed to buy closely held, Milpitas, California-based Assured Access Technology Inc. for $350 million in cash. That followed an acquisition last September of DSC Communications Corp., based in Plano, Texas. Alcatel, which is second in Europe to Ericsson AB, has vowed to make more purchases to fill gaps in its product line to better compete against companies including Lucent Technologies Inc., Nortel Networks Corp. and Cisco Systems Inc. Each Alcatel ADS represents one-fifth of an Alcatel share. The acquisition, expected to be completed in January 2000, is subject to antitrust clearance, Alcatel said. JP Morgan Securities advised Alcatel on the acquisition.