It's Official: 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 $254 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.

[Related: Alcatel-Lucent Aims For The Cloud With SDN Venture]

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.

As of February, Alcatel-Lucent had roughly 300 channel partners in North America. The company told CRN at the time that it hopes to continue driving its North American sales through partners, even after the China Huaxin deal is complete.

Gus Vasilakis, head of Alcatel-Lucent Enterprise's North America business, said that is still the case.

"With our new company, we have a new operating model where more of our field resources will be focused on the development of regional channels to support our customer base," Vasilakis told CRN in an emailed statement. "We are in the process of negotiating an enhanced distributor agreement with Arrow that includes, for the first time, a 'fast start' environment for our networking product line. The goal is to significantly reduce the steps to become authorized to sell our commoditized products, such as layer 2 switching lines, including our full SMB voice, WLAN [and] LAN solutions."

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 $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 $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.

PUBLISHED OCT. 1, 2014