Alcatel Buys Pirelli Submarine Assets

Alcatel to pay Pirelli €52.5M for submarine telecommunication assets; Pirelli to pay Alcatel €45M for a 5% share of its submarine business

May 6, 2004

1 Min Read

PARIS and MILAN -- Alcatel (Paris: CGEP.PA and NYSE: ALA) and Pirelli (Milan:PECI.MI) announced today that they have signed an agreement regarding their respective submarinetelecommunication businesses. As outlined in the agreement, Alcatel would acquire certain Pirellirelated assets and obtain intellectual property rights, while Pirelli would take a 5% shareholding inAlcatel’s submarine business, with associated mutual put and call options.

Alcatel would pay Pirelli Euro 52.5 million for the relevant submarine telecommunication assets andintellectual property rights and Pirelli would pay Alcatel Euro 45 million for its shareholding inAlcatel’s submarine telecommunication business.

This transaction would allow Alcatel to benefit from diversified business opportunities and enlargedintellectual property rights thereby further strengthening its worldwide lead in optical submarinenetworks. Alcatel would therefore play a leading role in the consolidation of both leading Europeansubmarine networking players to better serve the global market.

For Pirelli, the agreement signals a further step forward in focusing on cables and optic fibers as wellas on innovative products for broadband access and second-generation photonics, maintaining atthe same time an investment presence in the area of submarine telecommunication systems.

Optical submarine networks are playing an instrumental role in the development of the globalInternet infrastructure by interconnecting continents and remote parts of the world with massive, hi-speedinformation highways. Alcatel is the recognized worldwide leader in submarine networks.From regional to pan-continental networks, Alcatel is the global reference for specifying,manufacturing, installing, operating and maintaining full turnkey submarine network solutions andservices. Connecting every continent with the global network, Alcatel has laid over 450,000 km ofsubmarine networks, i.e. 11 times the circumference of the globe.

The transaction is subject to customary regulatory approvals. It is expected to be completed by theend of the second quarter of 2004.Alcatel SAPirelli SpA

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