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Flextronics in talks to buy part of Alcatel-Lucent's China business -sources

Wed 15th April, 2015 11:48am
By Engen Tham and Adam Jourdan 
    SHANGHAI, April 15 (Reuters) - Singapore's Flextronics 
International Ltd  FLEX.O  is in advanced talks to buy part of 
the Chinese business of Alcatel-Lucent SA  ALUA.PA , the French 
telecoms firm currently being taken over by Nokia Oyj 
 NOK1V.HE , two people told Reuters. 
    The contract electronics manufacturer plans to buy the 
manufacturing unit of Alcatel-Lucent Shanghai Bell, the French 
firm's largest joint venture (JV), the people with knowledge of 
the deal said. 
    The unit employs around 1,000 staff, the people said, and is 
part of the JV which, with its subsidiaries, generated revenue 
of 3.1 billion euros ($3.28 billion) last year. 
    Telecoms equipment makers like Alcatel-Lucent and Finland's 
Nokia have been grappling with a sector suffering slow growth 
prospects and pressure from low-cost Chinese rivals. 
    On Wednesday, Alcatel-Lucent agreed to a takeover by its 
larger rival in an all-share transaction valued at 15.6 billion 
euros. The firms will look to streamline the enlarged business, 
aiming for 900 million euros of operating cost savings by the 
end of 2019.  ID:nL5N0XC0X2  
    The two people did not disclose the value of the deal for 
Shanghai Bell's manufacturing arm, which makes products such as 
wireless devices. They said the price was under negotiation and 
would depend on what was finally included in the deal. 
    The people declined to be identified because the deal is not 
yet public. 
    Flextronics, which has supplied clients such as Microsoft 
Corp  MSFT.O , Google Inc  GOOGL.O  and Siemens AG  SIEGn.DE , 
did not immediately comment. 
    Alcatel-Lucent and its Shanghai JV declined to comment. 
     
    CHINESE FUTURE 
    Nokia Chief Executive Rajeev Suri said he and Alcatel-Lucent 
counterpart Michel Combes would soon meet their respective 
Chinese partners to discuss the future of their China units. 
    "We will open the discussions about what is the best 
strategy for our China operations," he said on a conference call 
with investors after Nokia announced the takeover. 
    Nokia officials declined to comment on the Flextronics deal. 
    Shanghai Bell is a joint venture with the Chinese 
government, in which Alcatel-Lucent owns around 50 percent, 
according to its 2014 annual report. 
    The JV is currently dealing with the fallout of an incident 
earlier this year, when its human resources director was found 
dead in a river near Shanghai after making allegations of 
wrongdoing and corruption against the firm.  ID:nL4N0W62RH  
    Shanghai Bell said it was investigating the allegations. 
    The joint venture has around 10,000 employees in China, 
according to its official LinkedIn webpage. 
 
($1 = 0.9446 euros) 
 
 (Additional reporting by Rujun Shen in SINGAPORE, Leila Abboud 
in PARIS, Jussi Rosendahl in HELSINKI and SHANGHAI newsroom; 
Editing by Christopher Cushing) 
 ((adam.jourdan@thomsonreuters.com; +86 21 6104 1778; Reuters 
Messaging: adam.jourdan.thomsonreuters.com@reuters.net)) 
 
Keywords: ALCATEL LUCENT CHINA/FLEXTRONICS ITNL
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