PARIS, Feb. 24 -- Alcatel has entered into a definitive agreement to acquire Newbridge Networks Corp. of Kanata, Ontario, Canada. The agreement, which has been approved by the boards of directors of both companies, asks Newbridge shareholders to approve a merger agreement that calls for the conversion of each Newbridge share into 0.81 shares of Alcatel. Based on Alcatel's closing price of $48 1/8 (US) on February 22, 2000, the acquisition has an estimated value of $7.1 billion (US).
Newbridge will merge with Alcatel's Carrier Data Division (CDD) to create the new Carrier Internetworking Division. Prior to this acquisition, CDD had anticipated revenues of over $1 billion (US) on sales of Internet-related equipment in 2000. The new division, which will be headquartered in Kanata, Canada, is expected to have combined annual sales of more than $2.5 billion (US) on a pro forma basis.
Commenting on the acquisition, Serge Tchuruk, Alcatel's chairman and CEO, said, Alcatel is making a major move to become a worldwide leader in new generation networks, which will handle the explosive growth of data with the appropriate quality of service. This acquisition combines Alcatel's leading position in fast Internet access with Newbridge's strong ATM multiservice capabilities. Furthermore, the complementary position of both companies in network and service management, as well as their common approach to IP networks, will allow Alcatel to offer its customers and prospects a best in class product portfolio. This deal is very attractive for our shareholders because it is expected to boost both growth and income, thus enhancing shareholder value.