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Alcatel Expected to Acquire Newbridge

Talks were reported Friday, and after-hours trading in both stocks was halted Tuesday because of pending news.

French telecommunications supplier



is expected to announce an agreement to buy Canadian telecommunications and data networking company

Newbridge Networks


, analysts said late Tuesday.

Talks between the companies were reported Friday, and after-hours trading in both stocks was halted Tuesday just after the regular stock-market close because of pending news.

Speculative buying had pushed Newbridge's shares up 1 5/8, or 5%, to 34 3/8, while Alcatel's shares gained 3/8, or 1%, to 47 3/4.

Sarah Miller, spokeswoman for Newbridge, said the company's earnings conference call, scheduled for 5:30 p.m. Tuesday, had been postponed indefinitely. She declined to comment on whether Newbridge was being acquired.

Jim Kedersha, analyst for

SG Cowen Securities

, said analysts have been unable to contact the company but expect an announcement early Wednesday.

Patrick Houghton, analyst for

TheStreet Recommends

Sutro & Co.

, said the expectations for a deal were "pure speculation."

But he added: "It's kind of odd to not have your conference call after you schedule it. Smells like something's afoot."

Houghton said Alcatel is Newbridge's most likely acquirer, though the smaller company's data-management tools would appeal to



as well.

An Alcatel spokesman in Paris had left the office for the day. Kedersha said the French company probably wanted to announce the acquisition first, rather than letting Newbridge officials handle questions alone in a conference call.

Kedersha said a reported stock-swap offer of about 0.8 Alcatel share for every Newbridge share would be a disappointment. Such a deal would value Newbridge around $38.20 a share, or more than $7 billion, and would represent an 11% premium over Newbridge's closing price Tuesday. But Kedersha said he had heard speculation about a $40-a-share offer.

The companies did not disclose any deal price they might be discussing.

Kedersha rates Newbridge's stock a hold and does not have a rating on Alcatel. His firm has done no underwriting for Newbridge. Houghton rates Newbridge's shares a strong buy and also has no rating for Alcatel. His firm hasn't done underwriting for either company.

Alcatel bought two small American data networking companies last year in an effort to modernize its offerings. Newbridge's products serve both broadband and conventional wiring systems.

Newbridge is expected to report earnings of 11 cents a share for the quarter ended Jan. 31, according to a poll of analysts by

First Call/Thomson Financial