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France Telecom, Equant Sign Multi-Billion Dollar Deal - InternetNews.
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France Telecom, Equant Sign Multi-Billion Dollar Deal

[London, ENGLAND] France Telecom and business network operator Equant announced Monday a deal that merges Equant with France Telecom's international arm Global One while giving the French telco effective control of the new company with a 54.3 percent stake.

France Telecom will purchase the SITA Foundation's 68 million shares in Equant, exchanging one existing France Telecom share for 2.2 Equant shares.

To accelerate growth, France Telecom says it will invest a billion dollars in Equant/Global One through newly issued Equant voting preferred shares.

From the outset, the new company will be a world-leading provider of data and IP communications services for international businesses. It will have around 3,700 large business customers including over three-quarters of the world's top 100 companies.

In 2000, revenues for Equant/Global One will be between US $2.5 billion to US $3 billion.

Michel Bon, chairman and chief executive of France Telecom, said the deal would create a powerful force in the global data and IP market, offering customers a more extensive network and expanded range of services.

"The combined business will have the geographical presence, financial strength, management resources and technical capabilities to guarantee long-term success in a rapidly growing market," said Bon.

Speaking for Equant, President and Chief Executive Didier Delepine, said the agreements provide Equant with additional scale, network control and significant financial resources.

"With these developments and the benefits of access to the strengths of France Telecom, we can accelerate our growth strategy and further position ourselves as a pre-eminent provider of data network solutions," said Delepine.

The message from both parties was that everyone benefits: shareholders, customers and employees of both companies. Even SITA seemed happy with the deal, saying it would allow it to provide enhanced and more cost effective services to its customers in the Air Transport Community.

The new company will have more than 13,000 employees worldwide.

Although restructuring costs will amount to US $400 million, half of which will be met by France Telecom, the savings in the long term are expected to be considerable. By the third full year, operating cost savings could be over US $300 million per year, with duplicative capital expenditure reduced by a further US $75 million per year.

The acquisition of Global One by Equant has been approved by the boards of Equant and France Telecom, but is conditional upon approval by Equant shareholders.