Thales shells out $2b to buy acquire Alcatel businesses

French electronics and defense company Thales will acquire Alcatel SA's satellite and security operations for 1.7 billion euros ($2.08 billion) in cash and shares, keeping the politically sensitive assets in French hands, an Associated Press report said.

The Associated Press report said under the transaction, Alcatel will boost its stake in Thales to 21% from 9.5%, while the French state will see its stake reduced to 27.1% from 31%.

The deal has been pushed by Alcatel chairman and CEO Serge Tchuruk, who wants his company to focus on its core telecom business as it gears up to integrate the $13.4 billion purchase of Lucent Technologies, the report said.

Thales said the purchase, which still needs to be approved by shareholders, will increase its revenue by more than 2 billion euros ($2.44 billion) a year.

Under the terms of the deal, Thales will pay 26.67 million shares and 673 million euros ($825 million) in cash to Alcatel, the report said.