The telecom equipment maker Alcatel-Lucent has begun holding meetings with prospective suitors to scout out buyout interest in its $1 billion plus enterprise business, several people familiar with the matter told Reuters, a sister news service to Buyouts.
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, Hewlett-Packard and Avaya, these sources said.
Siemens Enterprise Communications, which is 51 percent owned by Los Angeles-based private equity firm
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 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. But 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 Wall Street Journal reported in April that Alcatel-Lucent was exploring a sale of the enterprise business that sells phone and telecommunications gear to corporations.
Nicola Leske is a Reuters correspondent in Frankfurt. Correspondents Nadia Damouni in New York and Jens Hack in Munich also contributed to this report.