Alcatel-Lucent sells enterprise business to China Huaxin

Alcatel-Lucent (Euronext Paris and NYSE: ALU) says it has closed a deal with China Huaxin Post & Telecommunication Economy Development Center for the divestment of its Enterprise division. Cash proceeds to Alcatel-Lucent are €202 million ($255 million).

Following the divestment, Alcatel-Lucent will maintain a minority stake in a newly formed holding company. To be called Alcatel-Lucent Enterprise, the new company be incorporated in France with headquarters in Colombes near Paris. It will continue to work with Alcatel-Lucent on a privileged business relationship basis.

The aim of the transaction is to "enable Alcatel-Lucent Enterprise to benefit from a strong and recognized investor, providing the means and resources necessary to strengthen its ambition including leadership positions in enterprise communications while accelerating investment in new areas of net growth," according to a company statement.

The transaction also enables Alcatel-Lucent to divest itself of assets that it no longer considered core to its operations, as CEO Michel Combes outlined in 2013 in announcing his Shift Plan (see "Alcatel-Lucent shifts and optical transport, FTTx shift with it"). Combes didn’t mention the enterprise unit initially as a divestiture target, but the handwriting was on the wall when he grouped the enterprise business under “Other” in the company’s reorganization.

In its new incarnation, Alcatel-Lucent Enterprise plans to invest and innovate in its existing core markets, namely enterprise communications and networking – while exploring new market opportunities in select, high-growth countries, industry verticals, and cloud services.

At the same time, the business will work to define new opportunities aimed at growing the company into a leading player in next-generation enterprise communications, enabling a shift from a pure technology-centric operation to an outcome-based delivery model, capable of delivering measurable benefits from both an economical and human perspective for its partners and customers.

Michel Emelianoff, chief executive officer, Alcatel-Lucent Enterprise said, "As a 'new' company our core mission is to help companies transform the way people communicate, harnessing capabilities offered by ever smarter devices and new use models. We see success as creating long-term value and customer relevancy by delivering business outcome to customers and partners through technology and business innovations. With such a dedicated investor, we now have the ability to execute on our ambition to become an essential player in the enterprise communications market and still be a reference for innovation and user experience."

"We are really excited by the acquisition of Alcatel-Lucent Enterprise," said Yuan Xin, chairman, China Huaxin. "Our long-term investment approach will help Alcatel-Lucent Enterprise deliver on its ambition while enabling us to strengthen our strategic position in the enterprise communications arena. Alcatel-Lucent Enterprise has very strong assets and a recognized leadership in many markets across the globe. We are looking forward to leveraging our investment capabilities and experience to bring this business to the next level, both in size and market outreach."

Alcatel-Lucent Enterprise will have over 2,700 employees worldwide and operations in more than 80 countries.

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