Alcatel-Lucent, the biggest maker and supplier of comms equipment in France is looking at "strategic options" for its enterprise business unit. In other words, the company wants to offload it and pay down some debt, as Martyn Warwick reports.
Rumours of the proposed sale had been swirling for a while but Alcatel-Lucent refused to comment on them. Indeed so persistent were the rumours that trades unions at the company took action in support of their demands that the management be more transparent about planned changes and business unit sales.
Thus when yesterday trades union sources acknowledged that management had been in consultation with them about probable job losses, the company changed its stance and issued a statement saying that "all options are being explored, including discussions with third parties". In other words, the enterprise division is indeed up for sale.
It seems Alcatel-Lucent's enterprise arm might fetch €1.5 billion. At one time the company had been thinking of taking the unit public via an Initial Public Offering but it was finally decided that market conditions are not right for such a move and so the sale option was taken up.
Since Ben Verwaayen left BT and crossed the channel to head up Alcatel-Lucent, the company's fortunes have markedly improved.
So far this year Alcatel-Lucent shares have risen in value by 67 per cent. The company is now worth 8.7 billion and rising as Mr. Verwaayen pursues his three-year grand plan to make Alcatel-Lucent a leaner, meaner, keener company. Mr. Verwaayen says his goal is to make Alcatel Lucent "normal" by the end of this year.
The enterprise business unit is big and a generator of revenues said to be in the region of 10 per cent of the company's total income. However, as Alcatel-Lucent does not break out the unit's revenues and record them separately in its publicly available accounts, it is not known exactly how profitable the division actually is. Presumably not as profitable as it should be or Ben Verwaayen would like it to be - hence the sale.
The market liked the idea though and Alcatel-Lucent sales rose by almost three per cent when the company finally confirmed that a sale is underway.
The question now is, who might buy it? Microsoft? Unlikely. HP? Equally unlikely. Avaya? How ironic would that be? Ericsson? Cisco? IBM? or is some dark horse out there biding its time before galloping in with a surprise bid?
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