Newbridge draws potential suitors
Jill Vardy and James Bagnell
Financial Post
OTTAWA -
Newbridge Networks
Corp.'s investment
bank has solicited at
least eight expressions
of interest in acquiring
the
telecommunications
company, analysts
have been told.
Morgan Stanley Dean
Witter & Co., hired
last week by
Newbridge to find
potential buyers and
evaluate offers , has
apparently found
plenty of interest.
"The line is in the water and there are real nibbles going on," said
Duncan Stewart, analyst at Tera Capital Corp. He said the "people at the
CEO level of interested competitors" have called to say they want to
talk.
Neither Newbridge or Morgan Stanley officials were available for
comment yesterday.
John Lawlor, Newbridge's vice-president of corporate communications,
confirmed on Friday the company has received several phone calls from
interested buyers, but no specific offer or proposal.
The rush to take a look at Newbridge began last Thursday, when
company officials opened the door to prospective suitors after months
of disappointing results and signs the company may be losing the war to
become a top supplier of communications network equipment.
Pearse Flynn, Newbridge's new president, said on a conference call the
company was looking at all strategic options regarding its future. "I
would say selling the company is included in the definition of 'all
strategic options,' wouldn't you?" he said to analysts.
One of the companies considered a likely suitor for Newbridge, LM
Ericsson AB, was sending mixed messages yesterday about its interest
in the smaller Canadian company.
No discussions are taking place at the moment, said Gary Pinkham,
Ericsson's vice-president of investor relations. But the situation could
change, he added, "if a customer situation dictated that we had to have
this technology in-house."
Mr. Pinkham was referring to the asynchronous transfer mode (ATM)
technology that underpins Newbridge's most important product line.
While Ericsson and Newbridge both make ATM products for large
telecommunications carriers, these are designed to be used in different
parts of the network -- and are considered complementary.
But Ericsson is trying to develop a second ATM line that competes
directly against that of Newbridge. "It's only a matter of time before we
develop our own set of products with similar capabilities [to those of
Newbridge's ATM switch]," said Mr. Pinkham.
The issue is whether Ericsson has enough time before potential
customers start looking elsewhere for their ATM technology. If the
Swedish company concludes it does not, then a bid for part of
Newbridge could make sense. Mr. Pinkham's comments seemed to run
counter to those of another Ericsson executive who said yesterday that
his company isn't interested in buying Newbridge.
"It is not in line with the strategy voiced last week," Lars Ostlund,
Ericsson spokesman, told Reuters.
Ericsson is one of a long list of global players considered to be a logical
suitor for some or all of Newbridge's assets. They include Nortel
Networks Corp., Alcatel Alsthom S.A., Cisco Systems Inc., Tellabs
Inc., Motorola Inc. and Siemens AG.
Analysts were quick to note that even if Ericsson or any other company
is interested in buying Newbridge, they are not about to say so and
drive up Newbridge's stock price. Newbridge shares closed yesterday
at $22.00 (US), up 50½ (US) in New York. |
