Good article from Yahoo talk line.
Subj: Merger talk involving Lucen
By: who103
Date: Feb 14 1998 8:08 A.M PST
Reply To: Msg. 1 by YahooFinance
Subj: Lucent looks to buy Tellabs (What about ASND???)
By: Remington12gauge
Date: Feb 13 1998 8:01 P.M PST
Reply To: Msg. 1 by YahooFinance
Top Stories: Is Lucent Looking at
Tellabs?
By Kevin Petrie
Staff Reporter
2/13/98 6:46 PM ET
Merger talk involving Lucent (LU:NYSE) emerged once
again Friday.
Renewed whispers that the phone-gear giant will take out
Tellabs (TLAB:Nasdaq) for $80 per share ($25 in cash, the
rest stock) helped push TLAB stock 1 3/16 higher to 57
15/16 on heavy volume. Lucent eased 5/16 to 94 1/8.
Analyst Charles Payne at the independent research firm
Wall Street Strategies ranks the probability of this deal as
an 8 out of 10; he declined to name his sources for the tip.
Payne told other news services of the potential deal earlier
this week, but says that previously he didn't know the likely
price of the transaction. Payne says he doesn't own either
stocks involved, although some subscribers to his service
do.
Officials at both Lucent and Tellabs declined to comment.
Lucent, which has entered a handful of small acquisitions
lately, might benefit from Tellabs' gear called "digital
cross-connects" for the wires on a network.
The 40% premium on TLAB shares strikes even Payne as a
little rich. And a significant hurdle: According to the terms of
its spinoff from AT&T (T:NYSE), Lucent cannot enter a
pooling-of-interest merger until October. So purchasing a
company as large as Tellabs (with a market cap of $10.3
billion) would force it to take significant noncash charges for
many years.
Traders on the floor at the Pacific Exchange, where TLAB
options trade, said volume was higher than usual, but the
implied volatility -- an often-used indicator of takeover
speculation in options -- wasn't abnormally high. Total
volume was about 4,600, up from a typical 2,500. Options
traders view rising out-of-the-money call volume (call options
with strike prices higher than the current share price) and
implied volatilities (the predicted trading range of a stock) as
signs that news of a pending acquisition is entering the
market.
"It was a little heavier than usual and the volatilities were a
little higher, but nothing that unusual. There was a lot of
two-way paper," said one P-Coast trader. Another trader
said today's "order flow wouldn't indicate a takeover."
Two-way paper describes trading in which both calls and
puts are active.
Volume was up though, especially on the out-of-the-money
March 60 calls, which traded more than 1,400 contracts and
rose 7/8 ($87.50) to 2 7/8 ($287.50). The deep
out-of-the-money March 65 calls traded 336 contracts today.
On the put side, the March 60 was the most popular,
posting volume of 753. That contract's price slid 1 ($100) to
4 1/4 ($425.00).
Traders said the implied volatilities were higher leading up to
the company's earnings report Jan. 26 but had recently slid
to 45 from the 50 level despite the stock's strength. Today,
the IVs were up slightly, to near 46, traders said.
Dave Dickerson |
