Bidders for Lucent's optical fiber unit

Lucent fiber unit in play

April 19, 2001: 7:09 p.m. ET

Four companies bid on Lucent's optical fiber unit, sale pegged at $5B-$8B

NEW YORK (CNNfn) - Four companies are in the running to buy the optical fiber unit of Lucent Technologies and could pay about $5 billion to $8 billion for the business, press reports said Thursday.

Alcatel (ALA: Research, Estimates), JDS Uniphase (JDSU: Research, Estimates), Corning (GLW: Research, Estimates) and Pirelli are taking part in the auction, the interactive version of the Financial Times reported Thursday.

The deadline to submit offers closed on Tuesday. Bidders will now be invited to discuss their offers in detail and an announcement could come within the next month, the FT.com said.

Salomon Smith Barney and JP Morgan Chase are conducting the auction.

Lucent and Salomon both declined to comment. JP Morgan could not be reached for comment.

The optical fiber unit could fetch between $8 billion and $10 billion, press reports said. The unit employs about 6,300 people, and makes and designs optical fiber, fiber cable and specialty fiber components for the telecommunications industry.

The decision to sell the unit is part of Murray Hill, N.J.-based Lucent (LU: Research, Estimates) strategy to focus on systems, software and services, the company said in March. Lucent is selling the unit in an attempt to pay off a heavy debt load. The technology giant has fallen behind rivals in the key optical networking market, struggling with manufacturing constraints and declining demand for its core telephone equipment products.

The Optical Fiber unit had $1.8 billion revenue in fiscal 2000 and is growing by 60 percent while the slightly bigger rival Corning Inc. is only growing at 20 percent, analysts said in March.

Lucent's debt in March was estimated at $6.5 billion. In March, Lucent was compelled to launch the IPO of Agere Systems Inc., its microelectronics unit. As part of the separation, Agere (AGR.A: up $0.56 to $6.90, Research, Estimates) assumed $2.5 billion in Lucent debt.