Alcatel-Lucent, S.A. (
has signed a definitive agreement with Madison Dearborn Partners
to sell its subsidiary, LGS Innovations LLC. The deal is an
all-cash transaction valued at $200 million and is expected to
close in the first quarter of 2014.
As per the deal, half the amount (around $100 million) will be
paid at the closing of the deal and the other half as a
subsequent variable component. This variable component will be
determined based on the divested company's results of operations
for the 2014 fiscal year.
LGS Innovations is a provider of secure networking, satellite
communications, VoIP, optical routers and other solutions for the
U.S. national security, defense, and advanced research
On the other hand, based in Chicago, Illinois, Madison
Dearborn Partners is a leading private equity investment firm.
The firm has six funds with a total capital of approximately $18
billion and it has completed investments in approximately 125
companies. Its six verticals include; Basic Industries; Business
& Government Services; Consumer; Financial & Transaction
Services; Health care and Telecom; Media and Technology
This divestiture is a strategic move by Alcatel and part of
its Shift Plan, wherein the company aims to reposition itself as
a specialist in IP Networking and Ultra-Broadband Access, while
reducing its fixed cost structure by €1 billion ($1.36 billion).
The Shift Plan also targets selective asset sales to generate at
least €1 billion by the end of 2015.
Alcatel-Lucent currently has a Zacks Rank #3 (Hold).
Better-ranked stocks in the communications components industry
TESSCO Technologies Inc
). All three stocks carry a Zacks Rank #2 (Buy).
1€=$1.36720, as on Dec 20, 2013
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