Draka, Alcatel join forces

Feb. 12, 2004 - Alcatel exec calls the deal part of 'necessary consolidation of fiber and fiber cable industry.'

Alcatel (www.alcatel.com) and Draka (www.draka.com) intend to combine their global optical fiber and communication cable business into a jointly owned company. The two organizations agreed that Draka would own 50.1% of the new company and Alcatel 49.9%.

"In fiber and fiber cables, the combination would be the undisputed number one in China, through the combination of Alcatel's assets with Draka's interest in YOFC, the leading Chinese optical fiber and fiber cable manufacturer," the companies said in a joint release announcing their intentions. "The new company would also be a leader in Europe and a major player in North America."

The proposed combination has received approval from Alcatel's board of directors and from Draka's supervisory board and board of management. The two sides expect to complete the deal by the end of the second quarter of this year. The deal is subject to customary regulatory approval, confirmatory due diligence, and agreement on final legal documentation.

Draka intends to issue EURO150 million of new equity in parallel with the creation of the new company. This new equity will be fully underwritten by Draka's two largest shareholders, Flint Holding NV and Parcom Ventures BV, the statement also said. Alcatel should contribute all its optical fiber and fiber cable assets to the new company, which would be accounted for as an equity company.

"With this announcement, we are making another important step in our strategy to focus on communication solutions," said Olivier Houssin, executive vice president of Alcatel. "As part of this strategy, Alcatel is playing an active role in fostering the necessary consolidation of the fiber and fiber cable industry. This proposed transaction will allow Alcatel to benefit from an improved fiber cable capability in its FTTH activity, thereby further strengthening its leading offering in broadband access. The proposed combination of Alcatel's and Draka's assets will also generate substantial technical and industrial synergies."

The combined company will have a product portfolio across fiber and fiber cable, as well as copper telecommunications and data communications cable.

"Draka is delighted to be joining forces with Alcatel," said Jan Van Kesteren, chairman of the board of management at Draka. "The proposed combination reinforces Draka's capabilities in the fiber and communication cable industry and as such would represent a major step in the group's strategic development. In this context, it provides a unique opportunity to roll out Draka's long-term growth strategy to become a top-five player in the global cable industry and to create value for Draka's shareholders."

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