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Madison Dearborn Partners leads in $200M purchase of LGS Innovations

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(Credit: Reuters) The logo of the telecom equipment maker Alcatel-Lucent is seen on the company site building in Rennes, western France, October 15, 2013. Alcatel-Lucent
January 6
12:50 AM 2014

Private equity firm Madison Dearborn Partners is heading an investor group that will buy LGS Innovations for $200 million from Alcatel-Lucent, The Washington Post reported. LGS Innovations is the federal-government focused subsidiary of telecommunications firm Alcatel-Lucent.

LGS was established after Lucent combined with Alcatel in 2006. LGS was formed separately and brings the federally-focused parts of Lucent and Alcatel under one roof, the report said. The company's workforce of 700 employees is headed by Kevin L. Kelly who took over the helm in 2012. Regarding the need to find a buyer, Kelly said LGS was "reaching some natural barriers... as a foreign-owned company."

Aside from Madison Dearborn Partners, the group that would be acquiring LGS also includes CoVant and an investor group managed by Joseph M. Kampf. The former Chief Executive Officer of Anteon, Kampf said LGS has established itself in areas that are not as vulnerable to spending cuts by the federal government.

The report quoted Kampf as saying, "It comes with a warehouse full of intellectual property in the form of patents and software and other technology, it's a great product house so it's capable of designing and building great pieces of equipment." Kampf and the other owners of LGS intend to retain Kelly as well as look for acquisitions that will grow the customers and work for LGS, the report said.

The deal is set to be completed by the end of March.

According to a December 20, 2013 report on The Wall Street Journal, the sale was part of Alcatel-Lucent's asset sale plan to fund its turnaround. Alcatel-Lucent Chief Executive Michel Combes is leading the company's "Shift" plan which seeks to sell assets, cut costs and concentrate on its most profitable businesses so that the struggling company could return to profit, the report said.  The firm is looking forward to raising $1.36 billion from the sale of its assets.

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