TCL Acquires Alcatel's Stake in Mobile-Phone Joint Venture

Strategic Insights -

TCL Communication Technology Holdings has agreed to buy its French partner Alcatel's 45 percent stake in their loss-making mobile-phone joint venture for $63.34 million. This move comes just nine months after TCL-Alcatel Mobile Phones began operations. The joint venture, TCL-Alcatel Mobile Phones (T&A HK), has reported a loss of $357 million on $1.03 billion sales in the first three months of this year. TCL Communication believes that taking full control of T&A HK will enable it to turn around its losses by leveraging the group's procurement, manufacturing, and research and development capabilities. The deal will also involve the restructuring of T&A HK and its subsidiaries, with the expectation of achieving future profit contributions.

Key Takeaways:

  • TCL Communication is acquiring Alcatel's 45 percent stake in TCL-Alcatel Mobile Phones (T&A HK) for $63.34 million.
  • The acquisition represents a 66 percent discount to the net asset value of Alcatel's 45 percent stake in T&A HK, which was valued at $184 million at the end of March.
  • The joint venture, T&A HK, has reported a loss of $357 million on $1.03 billion sales in the first three months of this year.
  • TCL Communication expects to achieve synergies through the restructuring of T&A HK and its subsidiaries, contributing to profit in the future.
  • Contracts of 360 staff at T&A HK's wholly owned French subsidiary, TCL and Alcatel Mobile Phones SAS (T&A SAS), will be taken over by Alcatel in 18 months, starting from July.
  • TCL Communication will transform T&A SAS into a European sales and product development centre.
  • The deal needs to be approved by the company's independent shareholders and by the listing committee of the stock exchange.

Statistics:

  • $63.34 million: The acquisition price of Alcatel's 45 percent stake in T&A HK.
  • 66%: The discount to the net asset value of Alcatel's 45 percent stake in T&A HK, valued at $184 million at the end of March.
  • 45%: Alcatel's current stake in T&A HK.
  • 54.6%: TCL's expected stake in TCL Communication after the acquisition.
  • 360: The number of staff at T&A HK's wholly owned French subsidiary, TCL and Alcatel Mobile Phones SAS (T&A SAS), whose contracts will be taken over by Alcatel.
  • $1.03 billion: T&A HK's sales in the first three months of this year.
  • $357 million: T&A HK's loss in the first three months of this year.

Sources:

  • TCL Communication Technology Holdings' announcement filed with the stock exchange
  • DBS Asia Capital's appointment as independent financial adviser for a board committee advising independent shareholders