A French company, Alcatel, is taking over Canada's Newbridge Networks.

The deal is worth $7 billion US.

Newbridge is Canada's second largest independent telecommunications company. It produces switches and wireless products for Internet providers in over 100 countries.

Trading in both Newbridge Networks and Alcatel was halted late Tuesday. And Newbridge delayed its scheduled conference call with analysts to discuss its third quarter results. Sources said this was so Alcatel could announce the acquisition.

Newbridge Networks' board reportedly met Monday night to approve the Alcatel offer.

Newbridge's future has been a matter of open speculation since November. The company had just issued its 6th earnings warning in 10 quarters, and investors were looking for some sign Newbridge management was trying to turn things around. Chairman Terence Matthews told employees he'd hired an investment banker and was open to the possible sale of the company.

Alcatel was one of the companies said to have shown an immediate interest. But the names of others surfaced from time to time. Ericsson and Siemens were supposedly sniffing around. And some analysts thought Nokia, Fujitsu, or Marconi might be interested too. But within the last couple of weeks, it became clear that only Alcatel was seriously still in the hunt.

Analysts say Newbridge is too small to compete against its bigger rivals like Nortel Networks, Cisco, and Lucent, which all have market capitalizations 20 to 40 times greater than Newbridge's.

Alcatel's acquisition of Newbridge gives its rivals a few more ulcers. They're all developing new technology that merges voice and data on a single Internet-based network. Many of Newbridge's Internet-based product lines complement Alcatel's offerings.

Newbridge shares closed Tuesday at $50.60, up $3.85. The stock has risen 50 per cent in the last month as takeover talk intensified.

Newbridge was formed in 1986 and now sells its products in more than 100 countries. It's based in Kanata, just outside Ottawa.