Alcatel-Lucent agreed the sale of its LGS Innovations subsidiary to a Madison Dearborn Partners-led investor group, including technology investor CoVant.

The sale could rake in as much as $200 million for the Franco-US supplier.

LGS provides secure networking, satellite communications, VoIP, optical routers and other solutions for US national security, defence and advanced research communities.

Off-loading the unit is part of Alcatel-Lucent’s so-called “Shift” plan to reposition the company as a specialist in IP networking and ultra-broadband access.

Michel Combes, Alcatel-Lucent’s CEO, wants to reduce the firm’s fixed cost structure by €1 billion.

He aims to generate at least a further €1 billion through “selective asset sales” by the end of 2015.

Under the terms of the LGS deal, Madison Dearborn/CoVant will pay Alcatel-Lucent up to $200 million, half of which is due on the deal closing, and up to 50 per cent depending on the divested company’s performance for the 2014 fiscal year.

Closing of the transaction, subject to US government approvals, is targeted for the first quarter of 2014.

According to a Reuters report, Alcatel-Lucent has also decided to sell its unit that supplies corporate telephony systems. The unit employs 2,800 people, including 1,400 in France.

“Mr Combes wants to sell this unit by 1 July 2014,” Alcatel-Lucent union CFDT said in a statement, quoted by Reuters.

The union added that several scenarios are under review, including a sale to an investment fund or to a Chinese investor. One or more industrial players could also be potential buyers, the union added.

Meanwhile Alcatel-Lucent this week announced the appointment of Tim Krause as its new chief marketing officer. Krause returns to the company from AT&T and will report into Combes.