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Alcatel, Draka to merge units, creating No. 2 optical-fiber

Posted on: Tuesday, 10 February 2004, 06:00 CST

PARIS (AP) -- Telecommunications-equipment suppliers Alcatel SA and Draka Holding NV will combine their optical-fiber and communication-cable businesses into a new venture, the companies said Tuesday.

The new entity, which will be 50.1 percent owned by the Dutch company Draka, and 49.9 percent owned by the French firm Alcatel, will have annual revenue of about Ç670 million (US$850 million).

The Amsterdam-based venture, which is not yet named, will control around 20 percent of the global market for optical fiber, trailing only Corning Inc., of Corning, New York.

The deal is expected to close by the end of the second quarter.

The merger hands a setback to French cable maker Nexans SA, which is seeking to bulk up the telecom-cable side of its business.

Nexans chief executive Gerard Hauser last week made public his interest in acquiring Alcatel's fiber-optic cables business to add to Nexans' own US$691.4 million telecom-cable division.

Nomura Securities analyst Richard Windsor called Alcatel's decision to merge the business with Draka a positive strategic move.

``Manufacturing optical fibers is not a core business for Alcatel. You don't have to make optic fibers to offer solutions to telcos,'' Windsor said.

The new business will be the market leader in China, and will also be active in Europe and North America, Alcatel said.

As part of the deal, Draka intends to issue US$190.3 million in new equity, which will be fully underwritten by Draka's two largest shareholders, Flint Holding NV and Parcom Ventures BV.

Meanwhile, Alcatel will contribute all of its optical fiber and fiber-cable assets to the new company.

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