Lucent close to selling fiber unit

Lucent Technologies Inc. and Japanese telecommunications cable maker Furukawa Electric Co. Ltd. are in talks regarding the sale by Lucent of its Optical Fiber Solutions unit to Furukawa, a spokesman for Furukawa said Tuesday.

The two companies have been discussing the matter for some time since Lucent first approached Furukawa, said Nobuyuki Kishi, a Furukawa spokesman. Although he could not comment on when the deal is likely to be completed, he suggested expectations for the deal are high within the Tokyo-based company.

Kishi also declined to disclose the value of the deal however said it is not far from the US$2.52 billion reported by the Wall Street Journal in its Monday edition.

Furukawa, which has been trying to launch its optical fiber business in the U.S., is interested in Lucent's Optical Fiber Solutions unit because of its intellectual property, according to Kishi.

Lucent spokesman Jim Messenger declined to comment on the specifics of the Journal story. "Negotiations on this business are still in full progress, and when we're ready to announce something, we'll issue a news release," he said.

Lucent put the division up for sale several months ago as part of a wide-ranging restructuring plan -- and in an effort to raise much-needed cash. Standard & Poor's Corp. recently downgraded Lucent's debt rating to junk bond status. Lucent needs to raise $2 billion as a condition on a $4 billion credit line it initiated earlier this year.

Selling its fiber optics business for $2.75 billion would give Lucent the cash to meet that obligation, but the price tag would be far short of the $8 billion Lucent reportedly hoped to fetch for the unit. The company suffered a similar setback in March, when its microelectronics spin-off, Agere Systems Inc., raised only $3.6 billion through an initial public offering -- several billion less than intended.

The deal with Furukawa could still unravel over several pending issues, including intellectual-property arrangements, the Journal reported. Another bidder, such as Pirelli SpA or Alcatel SA, could still top Furukawa. Alcatel confirmed to reporters in late May that it had placed a bid for the Lucent unit. That same month, Alcatel and Lucent ended discussions about merging the two companies.

If Furukawa's bid is successful, the company plans to use the fiber-optics business to form two joint ventures with North Carolina-based cable manufacturer CommScope Inc., which would invest $600 million to $700 million in cash in the ventures, according to the newspaper.

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