Details of the sale are not yet confirmed but the broad outline of an agreement has been reached and a deal is expected to be announced within weeks, according to a source with knowledge of the situation who asked not to be named because the talks are private.
Both Alcatel and Permira declined to comment.
Shares in Alcatel-Lucent traded Thursday at €2.19 up almost 6% on their previous close after the Financial Times earlier reported that the deal, which was rumored to have collapsed because of tight credit markets, would go ahead.
Permira has been in negotiations to buy the operation, called Genesys Telecommunications Laboratories, and smaller Ethernet and voice over internet protocol, or VOIP, units, since the first quarter of 2011. Alcatel-Lucent appointed advisors to review options for the businesses as part of a restructuring to focus on its network technologies operations.
The buyout shop submitted a bid of about $1.3 billion for the units in July and was reported to have emerged as the frontrunner because its offer was considered the most likely to complete and because it included employment guarantees for the operations' French work force. Siemens Enterprise, which is 51% owned by Los Angeles-based buyout shop Gores Group LLC and 49% by Siemens AG of Germany, had also expressed an interest in the businesses.
The sale will be the second largest by Alcatel-Lucent CEO Ben Verwaayen since he took over at the troubled Paris-based telecommunications technology maker in September 2008. Alcatel-Lucent sold a 20.8% stake in French engineering group Thales SA to Dassault Aviation SA for €1.57 billion ($2.1 billion) in December 2008.
The operations slated for sale to Permira have combined sales of about €1 billion, equal to about 10% of Alcatel-Lucent's total revenue. Verwaayen is expected to reinvest proceeds from the sale in his company's network technology operations, which provide telecommunications hardware and software to large businesses and telecoms companies.
A renewed focus on IP and wireless technologies is beginning to pay dividends for the Paris-based company. Alcatel-Lucent reported two consecutive quarterly profits over the first half of this year and is on track to record its first profitable year since its creation in 2006, when Alcatel SA paid $11.6 billion for Lucent Technologies Inc. of Murray Hill N.J. Lucent, owner of the legendary Bell Laboratories, was the networking and equipment business spun off from AT&T in 1996.
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