Alcatel-Lucent announced today (20 December 2013) that it is to sell its subsidiary, LGS Innovations LLC, to a US-based company owned by a Madison Dearborn Partners-led investor group that includes CoVant.
LGS Innovations provides secure networking, satellite communications, VoIP, optical routers and other solutions for the US national security, defense, and advanced research communities, and has a heritage as a trusted partner of the US Federal Government extending back over 60 years.
The divestment forms part of the commitments outlined by Alcatel-Lucent in The Shift Plan – a restructuring programme designed to bring the company into profitability. Announced in June, the plan set out the strategy to reposition the company as a specialist in IP networking and ultra-broadband access, while reducing its fixed cost structure by Euro 1 billion and making selective asset sales to generate at least Euro 1 billion by the end of 2015.
The cash transaction agreed between Alcatel-Lucent and the Madison Dearborn/CoVant group will comprise a total amount of up to USD$ 200 million, of which 50% will be paid at closing, and up to 50% in a subsequent variable component to be determined on the divested company’s results of operations for the 2014 fiscal year. Closing of the transaction is subject to certain conditions, including US Government approvals, and is targeted to occur in the first quarter of 2014.
Michel Combes, CEO of Alcatel-Lucent, said: “We have, under The Shift Plan, made a firm commitment to divesting assets as and when the right opportunity arises for Alcatel-Lucent, and for the assets themselves. Today’s agreement with Madison Dearborn and CoVant represents the right opportunity for Alcatel-Lucent and LGS Innovations. We wish the LGS team well as they start a new chapter in their long and trusted service to the US Federal Government.”
Madison Dearborn is a private equity firm that invests across a broad spectrum of industries, including business and government services, while CoVant is a holding company focused on acquiring and growing companies in the federal technology solutions marketplace.
“LGS Innovations is a highly attractive business and we’re pleased to have the opportunity to evolve the company,” commented Doug Grissom, a managing director at Madison Dearborn and head of the firm’s Business and Government Services team. “We look forward to partnering with the management team and CoVant to the benefit of LGS Innovations LLC’s customers and employees.”
Joseph Kampf, CEO of CoVant, and the former CEO of Anteon International and current board director of A-T Solutions said: “We plan to capitalise on LGS Innovations’ competitive positioning and work to expand its presence within the US Government and drive its revenue by broadening its customer base, products, and solutions.”