CHICAGO, June 10 (Reuter) - U.S. Robotics Corp (NASDAQ:USRX) shareholders are expected to vote in favor of the company's proposed merger with 3Com Corp (NASDAQ:COMS) at a special meeting Wednesday.
The company said it sees the merger going through as planned.
"We don't expect any surprises," a spokeswoman for U.S. Robotics said.
In February, U.S. Robotics and 3Com agreed to merge in a stock deal valued at the time at $7.3 billion. The share prices of both companies have risen in the meantime, and the deal is currently valued at more than $8.5 billion.
Under the terms of the agreement, U.S. Robotics shareholders will receive 1.75 shares of 3Com for each U.S. Robotics share. U.S. Robotics has 107.5 million shares outstanding including vested options.
When the deal was announced, shares of Santa Clara, California-based 3Com stock were trading at about $39 a share and Skokie, Illinois-based U.S. Robotics at about $61.
U.S. Robotics and 3Com shares fell in the weeks following the merger announcement but both have since rebounded. On Tuesday U.S. Robotics closed off 1-1/2 at $79-3/16, and 3Com ended down 7/16 at $45-7/16.
"Most shareholders are looking long-term and see this combination as the best possible route for sustained shareholder wealth," said Amar Senan, an analyst for Volpe, Welty & Co.
Some analysts initially said they thought U.S. Robotics had sold itself short for the near term, especially considering 3Com was plagued with price cuts in its key adapter card market while U.S. Robotics was just beginning to ship x2, its long-awaited high-speed modem technology.
Seven shareholder lawsuits were filed against U.S. Robotics regarding the merger, but the company said it believes the suits are without merit.
The combined entity is expected to take on networking giant Cisco Systems Inc (NASDAQ:CSCO), which analysts said neither company would have been able to tackle alone. In addition, the merger of Ascend Communications Inc (NASDAQ:ASND) and Cascade Communications Corp (NASDAQ:CSCC) means stiffer competition in the remote access market as well, where U.S. Robotics is currently a leader, analysts said.
U.S. Robotics and 3Com shareholder meetings are scheduled simultaneously for 1100 CDT, and U.S. Robotics has said it expects to close the deal on Wednesday if the merger is approved.
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Pass the tissues, please. Tomorrow may very well be the last day of trading in USRX.
I know I'm on record supporting the merger (before and after the fact), but it still hurts. I kind of feel like the guy with the stick of dynamite and hunting dog. It did exactly as was told, but the results were painful. I guess this has a much happier ending, at least insofar as the wallet is concerned. <GGG> |
