Infonet Reportedly Is Back in Talks to Purchase Equant
Infonet Service Corp., an El Segundo-based provider of network communications services, is in talks to buy European rival Equant, according to published reports.
The negotiations, which have occurred on and off during the summer, are focusing on final terms for a deal, such as price and whether to use cash or Infonet’s stock as currency, according to the reports.
Equant has a market capitalization of $9.2 billion. Based in Amsterdam, Equant owns the world’s largest data network, which reaches businesses in more than 220 countries and territories.
Equant shares surged $5.56 to $45.44 on the New York Stock Exchange on Tuesday, as takeover rumors swirled. Infonet rose 50 cents to $15.38, also on the NYSE. Both stocks have plunged from their 52-week highs. Equant peaked at $132 in the last year, while Infonet was as high as $33.69. Infonet’s initial public offering, in which it raised $1.1 billion, was in December at $21 a share.
An Infonet spokesman termed the reports market speculation and declined to comment as a matter of policy. Equant could not be reached.
Infonet was founded in 1969 as a unit of El Segundo-based Computer Sciences Corp., one of the world’s largest providers of information technology consulting and outsourcing services. Infonet provides Internet access, consulting, Web hosting and other services to multinational companies, especially those with operations in Europe and Africa. The company went public last year in one of the biggest IPOs ever for a Southland company. It has 2,000 employees worldwide, 600 of which are in El Segundo.
If merged with Infonet’s network, which serves 1,150 multinational companies including Microsoft, Volkswagen, Nestle and Nokia, the combined company could strengthen its global reach while achieving significant cost savings, analysts said.
“The combination of the two networks would create one of, if not the most, powerful data networks in the world,” Lehman Bros. analyst Dan Fletcher told the Wall Street Journal. “Strategically, the companies’ strengths complement one another.”
“In addition to achieving ‘operating synergies,’ ” the combined companies could also benefit from increased “leverage with vendors to buy equipment,” Fletcher said.
The current round of negotiations might still fall apart, according to Financial Times.
Equant is also continuing talks with France Telecom, Financial Times reported. In recent months, Equant also has held merger talks with Global Crossing and Deutsche Telecom.
Equant was formed out of a reservation network created 50 years ago by several major airlines to handle passenger reservations and track baggage. SITA, a consortium of the world’s largest airlines, has been trying to dump its 33% stake in the company. Investors have also viewed Equant as too small to survive on its own.
Last month, Infonet reported quarterly earnings of $7.7 million on revenue of $154.2 million.
