Alcatel, the French telecoms and technology company, will next month become the first company in Europe to issue a tracking stock in one of its subsidiaries, in a move which could open the door to a flood of similar European issues.

Morgan Stanley Dean Witter has won the mandate to lead the deal, which will see around 20% of the value of Alcatel Optronics, the optical components division of Alcatel, sold in the form of tracking stock in Paris and New York next month. It is understood that Morgan Stanley won the deal against stiff competition from Goldman Sachs. Both firms have invested heavily in researching the regulatory structures and potential for tracking stocks in Europe.