AlcaLu Sells US Unit for $200M

Alcatel-Lucent has agreed the sale of LGS Innovations LLC, a subsidiary that sells communications technology and support services to the US Federal Government, for up to $200 million.

The purchaser, a group of investors led by private equity firm Madison Dearborn Partners, will pay Alcatel-Lucent $100 million up front and then up to a further $100 million depending on the financial performance of LGS.

LGS Innovations is an independent subsidiary of AlcaLu, with about 650 staff, that is dedicated to delivering technology (optical, IP, security, and so on) and supporting integration and research services to Federal Civilian Agencies, the Department of Defense, and the Advanced Programs community. "We are the U.S. Federal Government's one-stop shop for all its networking and communications needs -- from infrastructure requirements including facilities management, to network architecture and network operations, to broadband and wireless networking solutions, to systems engineering, professional consulting services, and telecommunications products," notes LGS on its website.

The divestment is part of AlcaLu's Shift Plan, which aims to make the vendor leaner and more profitable by focusing on a reduced product portfolio (built around its IP division), reducing headcount and selling non-core assets. (See Alcatel-Lucent to Cut 10,000 Jobs and Alcatel-Lucent Builds Future Around IP.)

The announced divestment of LGS will be seen as further proof that CEO Michel Combes is delivering against that plan.

— Ray Le Maistre, Editor-in-Chief, Light Reading

COMMENTS Add Comment
DOShea 12/26/2013 | 11:04:46 AM
Timing Probably was not the greatest time to realize maximum sale value on a unit that serves the government market. I wonder how much the US federal government shutdown had to do with keeping half of the sale price on a performance guarantee.
MarkC73 12/23/2013 | 5:03:58 AM
Re: AlcaLu needs further divestments For mobile/wireless, I would say if it integrates with their IP core then it's a keeper, the rest should be up for bid, the problem may be who wants to buy.  Meaning keep the small/macro radios that go directly into the 7705, but the older SONET stuff should get sold off.

I'm interested in what they will do with their transport gear, they've spent effort over the years to try and integrate the feature sets between their router platform and their transport gear.  Will they continue or focus solely on their IP platform doing more?

In the end, I guess it depends on they what they can get vs. what they value a section of their business.  No plan is without risk or criticism, but Combes is showing he can execute.
Telecom_BDB 12/20/2013 | 9:53:39 AM
Re: AlcaLu needs further divestments This first divestment in the non-carrier business should be the start of other divestments in the non-carrier business to allow ALU to focus on its main customers and its core solutions. They should not waste their time and money to the so called strategic industries which are not strategic at all for ALU 
[email protected] 12/20/2013 | 8:00:10 AM
AlcaLu needs further divestments This needs o be just the start -- such deals are not easy to broker and this will sed confidence that Combes can deliver tro the plan but there needs to be something more significant in H1 2014 to help ALU focus on its core strengths.

What everyone is wpondering is - what will the company do with its wireless/mobile assets?
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