Alcatel Sells Satellite Subsidiaries, Railway Signaling Business to Thales

PARIS, April 6, 2006/Satnews Daily/ — Alcatel (Paris : CGEP.PA and NYSE : ALA) said on Wednesday it is selling its satellite subsidiaries, railway signaling business, and its integration and services activities for mission-critical systems to Thales for about $2.14 billion (1.74 billion euros).

Alcatel said the sale would strengthen its position as the reference shareholder of Thales, with a 21.6 percent stake, while Groupe Industriel Marcel Dassault will keep its 5 percent share, and the French state will remain the majority shareholder with 27.1 percent. EADS, who was reportedly eyeing Alcatel’s satellite businesses, was left out of the deal.

Alcatel confirmed that the board of Thales has approved the acquisition of Alcatel’s subsidiaries, further strengthening the industrial and commercial partnership between the two companies.

A cash payment of 673 million euros would be paid by Thales to Alcatel upon closing of the transaction.

Last Sunday, Alcatel and Lucent Technologies (NYSE: LU) announced a $13.4 billion merger creating a $36 billion (Euro 30 billion) global communications solutions company that is envisioned to provide the broadest wireless and wireline services portfolio in the industry.

In the space sector, Alcatel said it was giving up its 67 percent stake in the capital of Alcatel Alenia Space, a worldwide leader in the construction of satellites for both civil and military use, particularly for communications satellite operators, the armed forces and institutional European bodies such as ESA, the CNES and ASI.

This Joint Venture company, created in 2005, is the result of the grouping together of Alcatel’s and Finmeccanica’s relevant assets, the latter holding a 33 percent stake.

Alcatel also holds 33 percent share in the capital of Telespazio, worldwide leader in satellite services, jointly held at 67 percent by Finmeccanica.

The total revenues of Alcatel’s satellite and railway signaling business, based on 2005 results, amounted to 2 billion euros. The workforce represents approximately 11,000 people, mainly in France, Germany, Italy and Canada.

Alcatel said the sale is subject to the approval of Alcatel’s Board of directors within the framework of its proposed merger with Lucent Technologies, as well as the approval of its partner in satellite activities, Finmeccanica. The transaction will be also subject to regulatory approvals.

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