Alcatel-Lucent sells enterprise business to China Huaxin

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Alcatel-Lucent sells enterprise business to China Huaxin

Alcatel-Lucent has officially closed a deal to sell its enterprise business to Chinese investment firm China Huaxin, the French communications and networking company said Wednesday.

Through the deal, China Huaxin is paying Alcatel-Lucent 202 million Euros, or approximately AU$290 million, for majority ownership of Alcatel's Enterprise unit, which provides unified communications, wireless, networking gear and phone systems to the commercial market.

Alcatel-Lucent Enterprise consists of roughly 2,700 employees and operates in 80 countries. Its new headquarters will be in Colombes, France, and Alcatel will maintain a 15 percent stake in the business.

Paris-based Alcatel first revealed plans to sell its Enterprise arm to China Huaxin back in February, following years of speculation that the company was weighing a sale of its commercial business. It's a deal, according to Alcatel, that will pump more resources into its Enterprise business and allow it to attack new markets in a way it couldn't have without new investor backing.

"With such a dedicated investor, we now have the ability to execute on our ambition to become an essential player in the enterprise communications market and still be a reference for innovation and user experience," said Michel Emelianoff, CEO of Alcatel-Lucent Enterprise, in a statement Wednesday.

The sale of Alcatel's Enterprise business is part of The Shift Plan, a broader restructuring initiative rolled out by Alcatel CEO Michel Combes in June 2013. The aim of the plan is to cut costs and sell off select Alcatel assets in order to generate 1 billion Euros, or approximately US$1.3 billion, in savings by 2015. Combes said he also expects The Shift Plan to make Alcatel, which reported a net loss of 298 million Euro, or roughly US$375 million, in its most recent fiscal quarter, a profitable company again by the end of next year.  

The Shift Plan is the latest in a series of turnaround attempts staged by Alcatel over the past several years, as the company looks to grow its cash pile and compete more effectively against competitors, including Cisco Systems, Juniper Networks and Ericsson.

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