20% sell-offs happened before. This was Bear, Stearns take in January................................
thedailydeal.com
The value of C-Cube Semiconductor shares in C-Cube Microsystems' merger with Harmonic is well below comparables for the industry, says a Bear, Stearns & Co. arbitrage report.
Harmonic is acquiring C-Cube Microsytems and spinning off its semiconductor business. In the deal, each share of C-Cube is exchanged for 0.5427 of a Harmonic share and one share in the semiconductor business. Harmonic and C-Cube make digital video systems such as Internet TV boxes. On Friday, Harmonic shares closed down $11.57, or 10.7%, at $96.56. C-Cube fell $5.59 per share, or 7.4%, to $69.53. That values the expected spinoff at $17.13 per share, roughly $10.50 per share below comparables for C-Cube's semiconductor business, such as ESS Technology.
However, the final valuation of the semiconductor business could be affected by some dilution from the exercising of options in C-Cube and by taxes, according to Bear. The spinoff will incur a tax of the semiconductor business of roughly $2 per share, based on a market valuation of $17 per share, or $1.2 billion. |
