Alcatel-Lucent Scouting Buyout Interest in Enterprise Biz

Alcatel-Lucent is meeting with private equity firms and other potential suitors this week to scout interest in its $1 billion plus enterprise business, Reuters reported. Strategic parties including Cisco and Hewlett-Packard could also show interest in the business, Reuters wrote. Qatalyst Partners, founded by former Credit Suisse investment banker Frank Quattrone, is advising Alcatel-Lucent on the sale, Reuters said.

(Reuters) – Alcatel-Lucent (ALUA.PA) is holding meetings in San Francisco this week with prospective suitors to scout out buyout interest in its $1 billion plus enterprise business, several people familiar with the matter said.

A slew of private equity firms are expected to be among the potential buyers taking meetings with the telecom equipment maker, the sources said.

The few strategic parties that could show an interest include Cisco (CSCO.O), Hewlett-Packard (HPQ.N) and Avaya [AVXX.UL], these sources said.

Siemens Enterprise Communications (SEN), which is 51 percent owned by Los Angeles-based private equity firm Gores Group, is considered to be the frontrunner in the process, two of the sources said. German engineering group Siemens (SIEGn.DE) owns the rest and would likely have a say in any decision to buy.

A spokesman for Gores Group declined to comment. Alcatel-Lucent and SEN also declined comment.

Shares of Alcatel-Lucent extended gains to trade 2.4 percent higher at 4.276 euros. France’s CAC 40 index .FCHI was up 0.4 percent.

With Ben Verwaayen taking over the helm of Alcatel-Lucent in September 2008 to rescue the Franco-American company after a value-destroying merger in 2006, the sale of the enterprise business is part of the company’s effort to focus on its core operations, a source close to the situation said.

“This was always a non core asset and they are looking to move on,” the source said.

The potential sale, which one source pegged at about $1.2 billion, comes in the third and last year of Verwaayen’s promised turnaround of the group.

Qatalyst Partners, founded by former Credit Suisse investment banker Frank Quattrone, is advising Alcatel-Lucent on the sale, the sources said.


The enterprise business, being sold as a package, including a contact center software business called Genesys, acquired by Alcatel in 2000.

“It’s a business that is basically designed to work agnostically with anyone’s hardware,” one of the sources said.

The other businesses include Alcatel-Lucent’s IP Telephony and phone voice system, similar to Avaya’s core business, and an Ethernet switching business comparable to HP’s networking switches unit formerly called ProCurve.

Alcatel-Lucent has asked for indicative bids by early May and has requested cash offers, a second source familiar with the situation said.

Although the deadline could move around depending on the number of parties expressing interest, the first source said.

Alcatel-Lucent could also struggle with valuation, as the assets may have been more relevant had they been sold three years ago, the same source said.

Genesys is considered an attractive business, generating approximately 75 percent of the overall enterprise business, the second source said. Although the other two businesses would be a tough sale on their own, one of the sources said.

“The legacy voice business is very European focused, it is all unionized labor, it is all European geography, it is very expensive to fix,” the source said.

The Wall Street Journal reported earlier this month that Alcatel-Lucent was exploring a sale of the enterprise business that sells phone and telecommunications gear to corporations. (By Nicola Leske and Nadia Damouni; Addtional reporting by Jens Hack in Munich; Editing by Jon Loades-Carter)