Alcatel-Lucent's (NYSE: ALU) struggling submarine cable business has caught the attention of France's sovereign fund FSI, which may make a bid on the unit.
FSI, according to Reuters citing an article from Agefi that did not name sources, is just one of several parties that are interested in buying the cabling business. A sale of the unit could potentially generate from €600-€700 million ($800-$933 million) for the financially-strapped vendor.
What's driven the government to considering purchasing the unit is the fear that the intellectual property assets Alcatel-Lucent put up as collateral could end up being owned by investors outside France. The vendor's union leaders have also encouraged the government to buy a large stake in the cable business.
Another possible bidder on the unit is France Telecom. As reported by Los Echos in December, the government was trying to help the incumbent provider develop a deal to purchase the cable business.
In its Q3 earnings announcement, the Paris-based company announced a €1.25 billion ($1.62 billion) restructuring program that includes selling off assets, including the cable and enterprise communications business, and cutting 5,500 jobs.
Although Alcatel-Lucent has been signing new submarine cable network deals with the likes of new players like Seaborn Networks, the vendor said it was seeing overall weakness in the submarine cable market.
Following a challenging Q3, the service provider secured €1.6 billion ($2.1 billion) in new funding from Goldman Sachs and Credit Suisse Group to finance its €1.25 billion ($1.6 billion) restructuring program.
For more:
- Reuters has this article
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