SPX Finds Its Inrange Stake Worth More Than Itself
By Raymond Hennessey
Of DOW JONES NEWSWIRES
(This story was originally published late Monday)
NEW YORK (Dow Jones)--Without Inrange Technologies Corp. (INRG), SPX Corp.
(SPW) has no little or no value.
At least that's what investors seem to be saying after bidding up the shares
of Inrange for a second straight day Monday after its market debut Friday.
SPX, based in Muskegon, Mich., was the sole owner of Inrange, the
manufacturer of switches and other equipment for storage, data and
telecommunications networks, before the IPO. Inrange, of Mount Laurel, N.J.,
had been a unit of General Signal Corp. until SPX bought General Signal in
October 1998.
Today, SPX owns 75.6 million shares, valued at $4.52 billion, based on its
Monday closing price of $59.81 a share.
The problem is that SPX itself is worth just $4.55 billion, based on its
close of $144 and its 31.6 million shares outstanding. So investors, by
bidding up Inrange's shares, are effectively saying that SPX is worth just $30
million more than its investment in Inrange.
But SPX got more than $97 million in the proceeds from the Inrange IPO. None of this cash on hand is being valued in, either.
At one point late in the afternoon, the disparity between the two companies'
values was even worse. SPX technically had a negative value, since SPX's
Inrange stake was worth more than SPX's market capitalization. It was only a
late surge in the last minutes of trading that helped SPX get out of the hole.
An SPX spokesperson couldn't immediately be reached.
SPX isn't the only company to find itself in this position. In March, the
value of 3Com Corp.'s (COMS) majority stake in its Palm Inc. (PALM) handheld
computing operations was worth more than 3Com's market value after the Palm
IPO. It wasn't until two months later that the market corrected itself.
-By Raymond Hennessey, Dow Jones Newswires; 201-938-5354;
raymond.hennessey@dowjones.com
(END) DOW JONES NEWS 09-26-00
08:15 AM |
