Lucent/Furukawa close OFS sale for $2.3 B
Lucent closed the deal Friday on its Optical Fiber Solutions unit sale to Furukawa Electric Co. Ltd. of Japan, only hours after a spokeswoman said the end was "imminent." Furukawa had announced the closing Thursday, but Friday, Lucent said it hadn't yet closed.
Under the deal, Lucent will receive $2.3 billion from Furukawa for the majority of the company, or about $225 million less than the original agreement. Furukawa and CommScope have formed two joint ventures to operate part of the newly acquired company. That deal also had been revised, CommScope announced Friday. Under that deal, CommScope will pay less than the original deal for the ventures, and will also lower its ownership in the new companies.
Still not completed is Lucent's sale of its interests in two joint ventures in China, which comprise the remaining portion of the OFS sale. In that deal, Corning Inc. will purchase Lucent's share of Lucent Technologies Shanghai Fiber Optic Co. Ltd. and Lucent Technologies Beijing Fiber Optic Cable Co. for $225 million. The sale is still subject to approvals, including that of the Chinese government.
According to the July announcement, CommScope was to invest about $650 million in the two joint ventures. One venture would give CommScope 51 percent ownership in the fiber cable portion of Lucent's fiber optic business, and the other would give the company a 49 percent interest in the transmission fiber part of the same business, CommScope said then. Furukawa would own 49 percent of the first venture and 51 percent of the second. In July, CommScope said it intended to fund its portion by issuing a combination of debt and equity.
But CommScope reported late last month that third-quarter sales fell 31 percent to $177.7 million, and net income fell to $6.4 million, or 12 cents a share. Bookings were down 45 percent to $141.6 million. The results prompted CommScope to seek to restructure the agreement with Furukawa.
Friday, CommScope announced it would issue 10.2 million shares of its common stock, valued at $203 million, to Lucent, ending up with about 18 percent ownership in the fiber optic cable venture, including transmission fiber and cable manufacturing at OFS' Norcross, Ga. plant, as well as facilities in Germany and Brazil, and an interest in a joint venture in Carrollton, Ga.
CommScope also said it will buy a $30 million note, with interest, in the venture to finance working capital until the venture secures permanent financing. Proceeds from the stock sale to Lucent will fund the purchase of its part in the venture and the note purchase.