aviation - defence

Dassault could buy Alcatel-Lucent's stake in Thales

Tuesday 18 November 2008

French aerospace company Dassault Aviation, which makes the Rafale plane, has entered exclusive negotiations with telecoms equipment company Alcatel-Lucent, with the aim of buying the latter's 20.8% stake in Thales.

French telecom equipment giant Alcatel-Lucent has begun exclusive negotiations to sell its stake of nearly 21 percent in Thales to defence aerospace group Dassault Aviation at a 25-percent premium, the companies announced in a statement on Tuesday.

The Electronics firm Thales said it "offered total support" to talks expected to last until December 15 to sell Alcatel's 20.8 percent share in Thales to Dassault for 1.56 billion euros (197 billion dollars).

Dassault said it was holding discussions with the French government, which holds a 27-percent stake in Thales, "to define the terms of their partnership as Thales shareholders."

Under the proposed deal, Alcatel would sell Thales shares at 38 euros each, a 25-percent premium on the share price at the close of trading on Monday.

In October, the new chief executive on Alcatel-Lucent, Ben Verwaayen, announced that the French-US company would carry out a "complete strategic review" of its activities aimed at restoring the group to profitability after a series of poor results.

"We need to redefine our strategy, we need to streamline our portfolio," said Verwayyen, who took over after the surprise announcement in September that Serge Tchuruk and Patricia Russo were leaving the group which they had created by a merger.

Verwayyen has said a review of the group's strategic interests would take place at the beginning of December.

Alcatel first announced late last month that it was considering disposing of its stake in Thales.

However, the price mentioned is lower than an offer in October of 1.81 billion euros by European aerospace group EADS, which owns Airbus, for the shares owned by Alcatel, according to information from sources at the time.

The price of shares in Alcatel-Lucent gained 3.41 percent to 1.88 euros after the announcement while Thales stock lost 2.23 percent to 29.76 euros.

The overall CAC 40 index showed an overall fall of 1.63 percent in late morning trading.

A Thales spokesman said: "The announced price of 38 euros a share for the transaction reflects the group's solid foundations independent of immediate fluctuations in the market."