[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
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.