Markox5 re: TLTN shares and acquisition
TLTN shareholders received 3.3 WSTL shares for each TLTN share, and they had a bonfire for the TLTN scrip afterwards <ggg>.
I acquired the bulk of my WSTL holdings through purchase of TLTN after the announced merger, because the arbitrage spread stood at nearly 10% for a long time.
Legacy TLTN holders who didn't want a 'fast growth' company are long gone (e.g., the liquidation of WSTL shares in 17-15 range, through BARD back in May).
TLTN acquisition gave WSTL over $20M of cash, put the convertible bond to bed, and opened other finance options. It also brought under one roof a group of engineers who work on very similar products, probably providing an easy way for WSTL to expand R+D capability in one fell swoop. So it strikes me as an acquisition of 'intellectual capital' as much as physical capital.
The TLTN business was high-margin, no-growth; WSTL's total current business for 'telco access products' (TAP) which includes this part (would need to check the financials to estimate the mix of WSTL and TLTN) was flattish last Q, but is projected to bump up by $10M this Q vs last Q.
I expect there are other non-CPE products coming down the pike that are being worked on by this collective group of engineers, and this is the direction WSTL needs to go. Just my speculation. As WSTL's DSL-related revenues grow, they will be much closer to a pure play; this proportion of total revs went over 50% last quarter for the first time, and likely to stay well over.
Did WSTL overpay a bit for TLTN? Maybe, maybe not. Hard to say how the overhanging converts may have hurt WSTL's need to expand. But dilution is done deal. There is nothing else in the closet, if that is your concern.
HTH,
Rich |
