Swrdfish,
In answer to your first question, how to sell an acquisition to the acquirer's shareholders:
An acquirer such as CPQ can tell its shareholders that it is obtaining "the market leader in FR, FRAD, RA, [and the] technology leader in FRAD, FR, ATM, IP switch, RA." [Quoting from Maverick]
In addition, the acquirer can tell its shareholders that the acquisition price (8 x sales) is at a p.e. BELOW that of CSCO and in the ballpark of other networkers.
In addition, the acquirer can tell its shareholders that the company being acquired has over $500MM in cash on hand and an order backlog of some $300MM.
In addition, the acquirer can tell its shareholders that the company being acquired projects at least 33% revenue growth in 1998 and that it is a relatively high margin and hot growing industry.
In addition, the acquirer can tell its shareholders that, short of an acquisition, the acquirer will never get the jump-start needed to catch up against CSCO in the networking sector.
I think the shareholders will bite.
In answer to your second question, I believe the acquisition price will be in excess of $45/share.
In answer to your third question, perhaps Ejabat will start a bank. Actually, given the hurt that must accompany giving up control of his baby, I would not be surprised if he left after a time (depending upon the terms of the acquisition...he might be required to stay for a year or two).
Gary Korn
P.S. I can't respond to someone's opinion that an acquisition is "bogus" because that person did not care to support his opinion with a scintilla of evidence. The entire concept was dismissed with 3 or 4 words, ending in the word "bogus." |
