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January 6, 2004

Marconi sells US unit for $240m

Marconi Corporation Plc has sold its North American Access business to Advanced Fibre Communications Inc for $240m in cash that will be used to pay off debts left after the company's reorganization in 2002.

By CBR Staff Writer

The business supplies broadband equipment to regional Bell operating companies, and since they operate to standards exclusive to North America, Marconi deemed them non-core. In the six months to September 30, the business reported operating profit of 3m pounds ($5.5m) on revenue of 55m pounds ($100.1m).

Marconi acquired the business when it paid $2.1bn in 1999 to buy Cleveland, Ohio-based Reltec, part of a burst of acquisitions designed to put it into the major league alongside companies such as Lucent, Nortel, and Alcatel. However, when telcos cut spending, Marconi went into a downward spiral, handing over 99.5% of its equity to bondholders.

Petaluma, California-based Advanced Fibre said the product lines of both companies are complementary. Excluding acquisition-related charges, it expects the deal to be accretive to earnings and cash flow this year.

This article is based on material originally produced by ComputerWire.

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