Alcatel Rises to Highest Since 2008 on Chinese Bid Speculation

Alcatel-Lucent SA jumped to the highest price in 2 1/2 years in Paris on speculation that a Chinese company may bid for France’s largest telecommunications- equipment maker.

“There’s speculation in the market today of a takeover for Alcatel from a Chinese group,” said Jean-Michel Salvador, an analyst at AlphaValue in Paris.

Huawei Technologies Co. and ZTE Corp. (763) are China’s top two makers of equipment for telephone networks. Ross Gan, a spokesman for Shenzhen-based Huawei told Bloomberg News today that the company isn’t interested in bidding for Alcatel, sending the Paris-based company’s stock about 3 percent lower from its intraday level.

“It’s extremely unlikely that there will be a bid on Alcatel-Lucent by any Chinese company,” said Janardan Menon, a London-based analyst at Liberum Capital. “In most cases, these companies already have the technologies that Alcatel has, so there is nothing much to be gained.”

Alcatel rose as much as 39 cents, or 11 percent, to 3.99 euros, the highest level since September 2008, before Huawei’s denial. The stock traded at 3.83 euros, or 6.45 percent higher, at 3:04 p.m. on the Paris exchange.

Alix Cavallari, an Alcatel spokeswoman, declined to comment. Margrete Ma, a spokeswoman for ZTE, also based in the southern city of Shenzhen, couldn’t immediately be reached for comment after business hours.

U.S. Business

Led by Chief executive Officer Ben Verwaayen, Alcatel generated about 33 percent of its sales in the U.S. last year. This revenue stream may be at risk if there was a bid by ZTE or Huawei, Menon said.

“A very large part of Alcatel’s business comes from the U.S., which may be lost if bought by a Chinese company,” he said.

Last fall, U.S. lawmakers asked the Federal Communications Commission to review the security risks of domestic companies such as Sprint Nextel Corp. (S) using equipment from ZTE and Huawei. Sprint ultimately ordered gear from other suppliers.

The rumor of Chinese bidders for Alcatel “comes up regularly,” said Mirko Maier, an analyst at Landesbank Baden- Wuerttemberg in Stuttgart, Germany. Huawei and ZTE may be interested in Alcatel-Lucent’s U.S. customers, he said.

“A European takeover could make sense,” he said.

To contact the reporters on this story: Chiara Remondini in Milan at cremondini@bloomberg.net; Edmond Lococo in Beijing at elococo@bloomberg.net.

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net.

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