It is very doubtful that ALU will be acquired.
The French government considers ALU patents and its Submarine Cable business to be strategic national assets. The government has reportedly been involved with various schemes to protect those assets against loss from default, and or sale of the company. In addition, the LGS unit of Bell Labs is run by Americans, due to the classified nature of a lot of its work. The creation of this unit, in order to safeguard classified work and technologies, was a condition of the Lucent/Alcatel merger seven years ago. So the existence of the LGS unit would complicate any sale of ALU. Finally, the economy in Europe remains bad, and the French government, even if they were not xenophobic when it comes to business, and they are, would be extremely reluctant to let a major corporation leave the country.
So is a buyout of ALU impossible? No. It is just extremely unlikely, with the exception by another French company.
Besides, what is the logic of acquiring a company that is now embarking on its 4th or 5th restructuring effort in seven years, the outcome of which is far from assured given their weak balance sheet, the poor economy in Europe, and strong, aggressive competition.
I think the chances are huge! ALU has started taking bites of CSCO's business in routing and even SDN! CSCO sits on 45-50B. ALU has 15B revenue and is valued at 2B now!
IT will not cost CSCO anything to trow 6B to buy ALU at 5 bucks per share, and gain 15B and patents!
If I had to take a guess I'd say that over the next year as sales continue increasing, and ALU continues with new innovations, they will be in a great position for a large scale buyer to come in add ALUs operations to it's playbook for further international expansion. Wouldn't surprise me one bit if ALUs larger competitors are watching them closely in order to take advantage of the right time to make an offer. The thing to keep in mind is that ALUs profits are increasing at the same time they are cutting many expenses and increasing their international presence, usually this is a recipe to grow into a very profitable business... and who wants to sell a profitable business?
Hate to burst your bubble, but sales at ALU are expected, when compare to 2011, to continue to decline for the next couple of years.....also, the company is reducing its global foot print because they derive 96% of their revenue in only 60 countries, and they have a presence in 180 countries.....also, there are innumerable political problems with buying ALU, and that assumes they are an attractive takeover candidate, which they are not now, since they are projected to lose $677M this year and about $140M next year.....if they are lucky, ALU will be modestly profitable in 2015.....also, ALU has restructured 4 or 5 times in the last 7 years without producing results....so no one believes that this current effort will necessarily be successful.....investors are waiting to SEE RESULTS, first.
0 chance. They have to many good things happening now more than ever. Alcatel will continue and Grow for another 20 years. The perfect stock to carry long in your portfolio.
Sentiment: Strong Buy