ALCATEL TO BUY XYLAN; FRENCH TELECOM GIANT TO PAY $1.7 BILLION FOR CALABASAS-BASED COMPANY.

Byline: Laura M. Holson and Seth Schiesel The New York Times

Expanding its presence in the computer networking market, Alcatel of France, one of the world's biggest makers of telephone equipment, has agreed to acquire Xylan Corp. for more than $1.7 billion in cash, executives close to the deal said Monday.

The companies intend to announce the agreement Tuesday, the executives said.

Xylan is a fast-grng maker of equipment for linking computers in corporate and institutional networks and has been making inroads into selling more complex gear to telephone companies.

Alcatel, meanwhile, has been trying to expand beyond its roots in traditional and wireless telephone systems and into the blossoming data communications market. Acquiring Xylan would give that effort a quick boost.

The convergence of telephone and data technologies in recent years has spurred an equally vigorous realignment among the companies that make advanced communications equipment.

In January, Lucent Technologies Inc., North America's biggest maker of phone equipment, agreed to spend $20 billion to acquire Ascend Communications Inc., a data networking player. And last year, Northern Telecom of Canada acquired Bay Networks Inc. for $9.1 billion. At the same time, Cisco Systems Inc., the data communications giant, has been trying to win business from the big phone carriers that are Lucent's and Northern Telecom's traditi customers.

A deal between Alcatel and Xylan would be the second significant acquisition in the communications equipment arena in two days. Monday, General Electric of Britain said it had agreed to acquire Reltec Corp. for about $1.7 billion in cash. General Electric of Britain, which is not related to General Electric Co. of Fairfield, Conn., is one of Britain's biggest manufacturing companies and is looking to expand in the telecommunications equipment business.

Reltec, based in Cleveland, makes products called digital loop carriers, which expand the capacity of local telephone networks. Reltec's shareholders, including Kohlberg Kravis Roberts & Co., which owns 81.5 percent of the company, would get $29.50 in cash for each of their shares. General Electric of Britain also would assume Reltec's debt of about $360 million.

Kohlberg Kravis acquired control of Reltec for $475 million in 1995. The company initially offered stock to the public last year at $29 and the shares rose as high as $25. But the company's stock price suffered after it warned last year that its third-quarter earnings would not meet analysts' expectations.

Xylan's public shareholders are set to do better than Reltec's. Xylan first offered stock to the public in 1996 for $26. Alcatel has agreed to pay about $37 in cash for each share of Xylan, executives close to the agreement said Monday.

Alcatel and Xylan declined to comment.

Shares of Xylan rose 43.75 cents Monday, to $26.9375 in Nasdaq trading.