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Alcatel-Lucent Pursues Telecom Security Unit Sale to Thales

NEW YORK (The Deal) -- France's Alcatel-Lucent (ALU - Get Report) late Thursday said it was in talks to sell its online and telecommunications security business to Thales as CEO Michel Combes continues to make good on a promise to jettison 1 billion euros ($1.37 billion) in assets by the end of 2015.

Neither Paris-based Alcatel-Lucent nor Thales released a price or other financial information for the unit, which has about 75 employees and offers security software and equipment to telecommunications providers.

CEO Combes arrived at Alcatel-Lucent just over a year ago and began work on trimming down the company to allow it to compete better with larger rivals including China's Huawei Technologies Ltd. and Nokia Solutions and Networks BV, formerly Nokia Siemens Networks Oy.

"Alcatel-Lucent will be able to offer existing and new customers highly secured end-to-end network security solutions, combining its integrated security expertise in telecommunication products with complementary services provided by Thales," Alcatel-Lucent said.

Thales and Alcatel-Lucent said they still have to sign a binding contract on the deal, which would give Thales the unit's three French sites.

Alcatel-Lucent is also working through the final details of selling control of its Lucent Enterprise business telephony division to China Huaxin in a deal announced in early February that values the subsidiary at 268 million euros ($365 million) including debt.

In the Huaxin deal, which is supposed to be finalized this quarter, Alcatel-Lucent would retain 15% of the division and sell the rest to the state-backed technology investor.

Alcatel-Lucent in December agreed to sell its LGS Innovations LLC division to Chicago's Madison Dearborn Partners LLC for as much as $200 million.

The two businesses form the bulk of Alcatel-Lucent's so called "other" business segment, which reported revenue of 232 million euros for the fourth quarter and operating income of 12 million euros. Alcatel-Lucent has not provided a breakdown of earnings for the two units.

However, in February, Combes said he had sold Alcatel-Lucent assets worth a total 350 million euros and was on track to achieve his 1 billion euro goal. He also pledged to reduce costs by an additional 1 billion euros.

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