Newbridge takeover rumours intensify
Talk says Ericsson made $45 (U.S.) a share
offer on July 22 but was rejected
Simon Tuck
Technology Reporter; Source: Datastream and Bloomberg Financial Services
Saturday, July 31, 1999
Ottawa -- Talk of a possible takeover of Newbridge Networks Corp. has again intensified as several sources say the Canadian company has
been discussing a deal with Swedish giant L.M. Ericsson Telephone Co. Inc.
Takeover rumours have been swirling around Kanata, Ont.-based Newbridge for more than two years, but this latest round is different -- it
comes attached with numbers.
One well-placed source said yesterday that Ericsson had offered to buy Newbridge for $45 (U.S.) a share on July 22 but the bid was rejected
by Newbridge founder Terence Matthews, who owns about 25 per cent of the company. "They've been dancing together for two years," the
source said. "That's as good as it's going to get."
The total price of more than $7.5-billion would have been a substantial premium over Newbridge's current market value. The stock fell 31
cents to $27.13 yesterday on the New York Stock Exchange.
An on-line publication got the latest talk going Thursday when it reported that the two companies were holding takeover discussions in
Washington this week and that a deal could be announced as soon as Monday.
Both companies yesterday denied a deal was possible. "The whole thing is speculation," said Newbridge spokesman John Lawlor.
"It's just another rumour du jour," said Ericsson Canada's Bill Gajda. "There's no announcement imminent."
Both, however, also left a little wiggle room when asked if there had been any such talks in recent weeks. "I wouldn't be surprised if Ericsson
has been talking to a number of companies over the last few weeks, including Newbridge," Mr. Gajda said.
Mr. Lawlor said he was "almost certain" that no talks had occurred.
This week's Ericsson rumours were just the latest takeover talk to link Newbridge, a leader in data networking technology, with a larger voice
networking company. It's also been linked with Nortel Networks Corp. of Brampton, Ont., Lucent Technologies Inc. of Murray Hill, N.J., and
Siemens AG of Germany.
As with most of the previous rumours, yesterday's talk boosted Newbridge's share price -- at least in the short term. The stock had jumped
over the $43 (Canadian) mark in morning trade as word of the takeover rumours spread.
By the end of trading yesterday, however, both companies had denied a deal was imminent and Newbridge shares had fallen 2.4 per cent or
$1 to $40 on the Toronto Stock Exchange in heavy trading of 1.6 million shares. The stock has a 52-week range of $23.85 and $60.50.
COMPANY SNAPSHOTS
L.M. Ericsson
Chairman, CEO: Lars Ramqvist
Sweden symbol: LMEA
Head office: Stockholm, Sweden
Employees: 101,485
1998 revenue: 184.4-billion SF
1998 profit: 13-million SF
Operation: Develops and produces advanced systems and products for wired and mobile communications in public and private networks. The
product line includes digital and analog systems for telephones and networks, microwave radio links, radar surveillance systems and business
systems.
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Newbridge Networks
Chairman, CEO: Terence Matthews
TSE symbol: NNC
Head office: Kanata, Ont.
Employees: 6,336
1999 revenue: $1.8-billion
1999 profit: $179.2-million
Operations: Designs, manufactures, markets and services networking products and systems. The company's products enable corporations and
common carriers to build, expand and manage communications networks worldwide.
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