Alcatel snaps up Newbridge for $7.1bn

French telecoms equipment manufacturer Alcatel is buying networking company Newbridge Networks for $7.1bn, ending months of speculation.

Newbridge will be merged into Alcatel's Carrier Data Division to form a new Carrier Internetworking Division, headed up by Newbridge CEO Pearse Flynn.

Andreas Dohman, executive vice president of Alcatel Europe, Middle East and Africa, said: "Alcatel is very strong on the optical and ADSL side. We are strong with wireless technologies and ATM. These four elements are key strategies to compete in this market."

Although it has suffered two quarters of poor financial results, Newbridge is still recognised as one of the leading ATM specialists.

Alcatel will also inherit Newbridge's Internet-based technology. Lucent last year bought data networking firm Ascend Communications for nearly $24bn, while Nortel acquired its own new generation technology through Bay Networks in 1998 in a deal worth $6.7bn.

Ian Bramley, a director of research at Butler Group, said the acquisition value is on a more traditional level compared with some of the deals with the new generation of data communications companies.

Dohman agreed that Alcatel has a bargain in Newbridge - compared with the amount Lucent paid for Ascend.

Bramley continued that Newbridge customers could feel secure with company's transition into Alcatel stables. "While any big acquisition will cause a bit of change and upheaval, Alcatel will clearly value Newbridge's customer base and will try to avoid damaging it," he said.