The Globe and Mail ,Feb 21, 2000
( didn't see this yesterday )
TA
ÿÿÿÿÿÿÿ Newbridge slump seen helping deal
ÿÿÿÿ by Simon Tuck - Monday, February 21, 2000
ÿÿÿÿÿÿÿ globeinvestor.com
ÿÿÿÿ Ottawa -- The recent share price declines for Newbridge Networks Corp. and its leading suitor may make it easier to
ÿÿÿÿ complete a mammoth takeover deal of the Canadian telecommunications company -- and sell the offer to shareholders,
ÿÿÿÿ analysts say.
ÿÿÿÿ The stock pullback, which followed reports that Newbridge may be sold to Alcatel SA of France for $6.5-billion (U.S.) in
ÿÿÿÿ stock, would increase the size of the takeover premium and therefore make it more attractive to Newbridge's beleaguered
ÿÿÿÿ shareholders, analysts say.
ÿÿÿÿ "It will make it easier because it makes it cheaper," said Duncan Stewart, a portfolio manager at Tera Capital Corp. in
ÿÿÿÿ Toronto.
ÿÿÿÿ That price tag would have meant only a 1.5-per-cent premium for Newbridge shareholders, based on the company's stock
ÿÿÿÿ price at the time of the reports last week.
ÿÿÿÿ Shares of Kanata, Ont.-based Newbridge tumbled 6 per cent or $3.15 (Canadian) to $47.40 on the Toronto Stock Exchange
ÿÿÿÿ Friday, the day the reports were published. Before that, the stock had risen steadily since early November.
ÿÿÿÿ Newbridge said more than three months ago that it was up for sale, and had hired a New York investment banker to help its
ÿÿÿÿ cause. Many analysts say Newbridge will be sold by the end of the month, perhaps as soon as tomorrow, when the company
ÿÿÿÿ reports its latest quarterly results.
ÿÿÿÿ Alcatel, widely believed to be in serious takeover talks with Newbridge, also saw its a share price fall Friday. Its stock
ÿÿÿÿ tumbled $4.19 (U.S.) to $47.37 on the New York Stock Exchange as investors worried that the reported bid value would be
ÿÿÿÿ too much for the French telecommunications giant to digest.
ÿÿÿÿ A Toronto analyst said yesterday that the stock drops may or may not have an effect on any takeover talks. "It could or it
ÿÿÿÿ couldn't -- it depends on the sentiments of the guys involved," he said. "If everybody wants to make a deal work, they'll work
ÿÿÿÿ within the situation."
ÿÿÿÿ The stock movements would only raise an obstacle, he said, if one side tried to use them as a way to squeeze more out of the
ÿÿÿÿ negotiators on the other side of the table.
ÿÿÿÿ Newbridge, meanwhile, was hit with another leadership change over the weekend as John Lawlor, the company's top
ÿÿÿÿ investor relations official, announced he was leaving immediately. The resignation of a key Newbridge loyalist at this
ÿÿÿÿ crucial time creates a hole in the company's executive team and raises a host of fresh questions, according to analysts. No
ÿÿÿÿ replacement for Mr. Lawlor has been announced yet.
ÿÿÿÿ Analysts said Mr. Lawlor could have left because a takeover deal is imminent and he doesn't see himself having a future
ÿÿÿÿ with the buyer, or he already has another job lined up, or an ethical conflict of some sort exists between he and Newbridge.
ÿÿÿÿ He may also have left simply because he had grown tired of being a key spokesman for a troubled company that in recent
ÿÿÿÿ years has made it difficult for anyone doing his job.
ÿÿÿÿ "Why leave now if a sale is so close?" Mr. Stewart asked. "It seems more likely that various stresses of guiding Newbridge
ÿÿÿÿ through its last difficult few months may have made him more confident leaving earlier rather than later."
ÿÿÿÿ Mr. Lawlor didn't elaborate on his reasons for leaving Newbridge, other than to say he plans to take a break for at least a
ÿÿÿÿ month. |
