|
Alcatel snares Genesys
|
 |
September 28, 1999: 8:23 a.m. ET
But analysts express concern about $1.5B purchase of U.S. network integrator
|
LONDON (CNNfn) - France's Alcatel on Tuesday continued its transformation into a high-margin Internet and e-commerce systems competitor with the $1.5 billion purchase of San Francisco-based Genesys Telecommunications Laboratories, a creator of telecom-enabling software.
The deal is Alcatel's sixth U.S. acquisition in a year and gives it access to Genesys' expertise in software for telephone and Net-based call centers and so-called "enterprise management" systems.
However, analysts viewed the proposed purchase with caution.
Louis Landeman, telecom analyst at Standard & Poor's, noted Alcatel had avoided the cash element used in previous U.S. acquisitions but still paid a hefty premium in the all-stock deal.
He said that the French firm's fundamental problem -- poor cash flow -- still remained.
Alcatel shares (PCGE) fell 2.7 percent to 125.90 euros on concern that the Genesys buy is expensive and will hurt short-term earnings.
Alcatel is offering 1.667 of its American Depositary Shares for each Genesys share, equal to about $46.68, an implied 14 percent premium on the U.S. company's Monday close.
The deal, which is subject to regulatory approval and targeted for closing by January, restricts the final implied value of Genesys stock to between $45 and $55.
Genesys (GCTI), which has a market capitalization of $931 million, has seen its stock more than double this year, climbing from a 52-week low of just 9.
Alcatel has trimmed its conglomerate structure, spinning off Alstom (PALS), its engineering arm, to focus on Net-based and e-commerce equipment.
The United States has provided the basis for its strategic refocus, with this year's $2 billion acquisitions of Xylan and the $180 million takeover of Internet Switching boosting its position in the high-speed switching market.
"They are making the right strategic move, concentrating on the U.S.," said Landeman. "They are on the right track, but it is a tough market..
|
|
|
|
|
|
Alcatel
Genesys
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
