Yahoo Finance Flextronics in talks to buy part of Alcatel-Lucent's China business: sources
By Engen Tham and Adam Jourdan
SHANGHAI (Reuters) - Singapore's Flextronics International Ltd is in advanced talks to buy part of the Chinese business of Alcatel-Lucent SA, the French telecoms firm currently being taken over by Nokia Oyj, two people told Reuters.
The contract electronics manufacturer plans to buy the manufacturing unit of Alcatel-Lucent Shanghai Bell, the French firm's largest joint venture (JV), the people with knowledge of the deal said.
The unit employs around 1,000 staff, the people said, and is part of the JV which, with its subsidiaries, generated revenue of 3.1 billion euros ($3.28 billion) last year.
Telecoms equipment makers like Alcatel-Lucent and Finland's Nokia have been grappling with a sector suffering slow growth prospects and pressure from low-cost Chinese rivals.
On Wednesday, Alcatel-Lucent agreed to a takeover by its larger rival in an all-share transaction valued at 15.6 billion euros. The firms will look to streamline the enlarged business, aiming for 900 million euros of operating cost savings by the end of 2019.
The two people did not disclose the value of the deal for Shanghai Bell's manufacturing arm, which makes products such as wireless devices. They said the price was under negotiation and would depend on what was finally included in the deal.
The people declined to be identified because the deal is not yet public.
Flextronics, which has supplied clients such as Microsoft Corp, Google Inc and Siemens AG, did not immediately comment.
Alcatel-Lucent and its Shanghai JV declined to comment.
CHINESE FUTURE
Nokia Chief Executive Rajeev Suri said he and Alcatel-Lucent counterpart Michel Combes would soon meet their respective Chinese partners to discuss the future of their China units.
"We will open the discussions about what is the best strategy for our China operations," he said on a conference call with investors after Nokia announced the takeover.
Nokia officials declined to comment on the Flextronics deal.
Shanghai Bell is a joint venture with the Chinese government, in which Alcatel-Lucent owns around 50 percent, according to its 2014 annual report.
The JV is currently dealing with the fallout of an incident earlier this year, when its human resources director was found dead in a river near Shanghai after making allegations of wrongdoing and corruption against the firm.
Shanghai Bell said it was investigating the allegations.
The joint venture has around 10,000 employees in China, according to its official LinkedIn webpage.
($1 = 0.9446 euros)
(Additional reporting by Rujun Shen in SINGAPORE, Leila Abboud in PARIS, Jussi Rosendahl in HELSINKI and SHANGHAI newsroom; Editing by Christopher Cushing)
