Reuters article mentions possible sale price ($40-$42 US).
This is the first price I've seen mentioned in the media.
If it does sell for that much, it is a nice premium over
today's price.
Article follows:
------------------------------------------
Tuesday February 1 6:02 PM ET
Newbridge Stock Climbs As Sale Rumor Gathers Steam
By Susan Taylor
OTTAWA (Reuters) - Investors went on a buying binge of Newbridge Networks Corp. shares (Toronto:NNC.TO - news)(NYSE:NN - news) on Tuesday, boosting the stock by 16 percent as market watchers detected increasing signs that a takeover of the company is close.
Stock in the Ottawa-based firm surged in heavy trade of 3.1 million shares on the Toronto Stock Exchange to end the session at C$47.00, a gain of C$6.60 or 16.3 percent.
On New York, the stock rallied to close at 32-11/16, a gain of 4-6/16, or 15.5 percent, as 5.3 million shares changed hands.
``We are clearly seeing more than just simple uninformed (buying) or simple speculation -- I think we're starting to see a real indication that something's about to happen or something could be happening in the very near term,' said Andy Schopick, analyst at Nutmeg Securities Ltd. In Connecticut.
``So the guess becomes with who and at what price.'
Newbridge has been the target of rumors since announcing that it had hired an investment banker and was open to offers when it reported weak second-quarter results on November 18.
A growing faith that Newbridge will nail or exceed analysts' expectations for its third quarter, which closed on January 30, is the first sign a deal could be announced soon, analysts said.
``The textbook would dictate it's in their best interest to announce something before the good quarter gets released, because that will enhance the stock price,' said Rob MacLellan, analyst at CT Securities in Toronto.
``If you're the buyer you want to give the impression to your shareholders you're buying a company with good and improving results.'
Newbridge, which reports its results on February 22, has issued warnings in six of its last 10 quarters. The company said on January 7 that it was confident it would meet consensus forecasts, which First Call/Thomson Financial records at 11 cents per share.
George Hunt, analyst at Wachovia Securities Inc. in North Carolina, said three factors were behind the stock surge on Tuesday including Newbridge's plans to sell some of its shares in affiliate CrossKeys Systems Corp. (Toronto:CKY.TO - news)(NasdaqNM:CKEY - news), rebounding takeover rumors, and the likelihood of a good quarter.
``They have not pre-announced,' said Hunt, who raised his Newbridge rating to long-term buy from neutral on January 11. 'Most investors will take it as a sign they have made the quarter.'
Newbridge said on Tuesday it plans to sell 1.3 million shares in CrossKeys, which develops software for telecommunications companies to manage networks, reducing its stake to 3.6 million from 4.9 million shares.
Some analysts said the reduced holding indicates Newbridge is making itself more attractive to suitors.
``It's very apparent now that Newbridge is cleaning house somewhat and that there is a sequence of events that's unfolding here as a prelude to something bigger,' Schopick said.
Heavy trade in Newbridge is another sign that market watchers believe indicates a deal is on the horizon.
``We're hearing it domestically and out of the States as well...they're talking a (sale) price of $42 on the stock,' said one Bay Street trader who asked not to be named. ``Siemens (SIEGn.DE) , Marconi (MARN.IN) and Ericsson (LMEb.ST) are the three (companies) named this time round.'
While many analysts agree that Newbridge needs to be taken over to successfully compete in a sector dominated by corporate titans, there is less certainty over the premium that founder and CEO Terry Matthews would put on his firm.
``I think it's going to be $40 -- plus or minus a couple of bucks -- and I think it's going to happen before February 22,' said MacLellan. ``It appears to be gathering some serious momentum south of the border, which is driving the stock.' |
