There were three DJ reports, here's the first:
Bay Networks Up 8% On Renewed Rumors Of Buyout By Nortel
June 04, 1998 4:17 PM
NEW YORK (Dow Jones)--Bay Networks Inc.'s
(BAY) shares shot up nearly 8% Thursday on renewed
rumors it is a takeover target.
A trader said that according to one rumor, Bay has
received a $40-a-share offer from Northern Telecom
Ltd. (NT), and will consider it at a special board
meeting this weekend.
A Bay spokesman wasn't immediately available for
comment.
Two deals this week in the networking-equipment sector
also could be fanning the flames of speculation, a market
source said.
Thursday, Alcatel Alsthom (ALA) agreed to buy DSC
Communications Corp. (DIGI) for $4.4 billion, an 80%
premium to DSC's market value at the close of trading
Wednesday.
Earlier this week, Tellabs Inc. (TLAB) agreed to acquire
Ciena Corp. (CIEN) for stock valued at $6.9 billion.
The trader said Northern Telecom, or Nortel, wants to
reach an agreement to buy Bay before Bay's price runs
up in response to the rich premium paid for DSC.
A different industry source said the rumors about a
takeover of Bay were intensifying. He added that he has
heard "this is going to be the summer of acquisitions, and
they're all going to be big."
Bay recently traded at 30 1/8, up 2 3/16, or 7.8%, on
volume of 8.8 million shares. Average volume is 5 million
shares.
Ericsson Said In Running
At least two other makers of telecommunications
equipment are rumored to be courting Bay Networks,
the No. 2 maker of computer networking gear. Last
week, talk that Lucent Technologies Inc. (LU) was
prepared to buy Bay sent its stock up 9%. Sweden's
L.M. Ericsson Telephone Co. (ERICY) also is said to
be in the running, a trader said.
While Siemens AG of Germany is also thought to be
shopping for acquisitions, it hasn't been linked to Bay
Networks.
Other data-networking companies said to be takeover
candidates are Fore Systems Inc. (FORE), Ascend
Communications Inc. (ASND) and Cabletron Systems
Inc. (CS). The leading maker of networking gear, Cisco
Systems Inc. (CSCO), is believed to be too big to be
acquired.
Fore's shares recently were up 2 3/32, or 10.5%, to 22
1/8. Ascend was up 2 11/16, or 6.4%, to 44 5/8 and
Cabletron was up 7/16, or 3.8%, to 12.
The rumors about Nortel and Bay go back at least to
the middle of last month, when an unconfirmed report
that Bay had rejected a Nortel offer as too low sent the
stock up 16%.
There's also talk in the markets that Bay has instructed
its investment bankers to draw up financial reports for
prospective buyers.
Bay Networks' recent volatility isn't the only sign the
markets expect something to happen. Options traders a
buying up Bay's June 30 and June 35 call options, which
would likely increase in value if Bay were to sign a deal
over the weekend.
-Sean Davis; 201-938-5234
-Dwight Oestricher; 201-938-5266
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