Alcatel to sell modem unit

June 7, 2001
Web posted at: 0827 GMT

LONDON (CNN) -- French telecoms equipment maker Alcatel has agreed to sell its Internet access modem business to Thomson Multimedia for $389 million in shares.

Alcatel and France's Thomson, the world's No. 4 consumer electronics maker, said in a statement that Alcatel would sell its DSL modem unit for 9.5 million new Thomson shares at an average price of 48 ($41).

Alcatel, which last week ended takeover talks with U.S. equipment maker Lucent Technologies (LU: Research, Estimates), said after the talks collapsed that it would stop making mobile handsets, sell some businesses and focus on networks, optics and communications in space.

Alcatel had a 6.4 percent stake in Thomson at the end of March, a statement said. The 9.5 million new shares are equivalent to 3.58 percent of Thomson and Alcatel's stake will rise to 9.6 percent after the share issue.

"Alcatel looks forward to this extended cooperation with Thomson Multimedia which closely links two core activities of our companies," the  statement said.

Thomson, the biggest seller of televisions in the U.S., will gain a leading position in DSL modems and said the activity would complement its set-top box and digital cable modem units.

Alcatel (PCGE) shares dropped 2.5 percent to 29.70 and Thomson (PHO) shares fell 0.4 percent to 44.99 in Paris trading after the deal was announced.

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