Nortel Buy Of Bay Seen As First In Consolidation Wave
June 15, 1998 11:29 AM
By Joelle Tessler
NEW YORK (Dow Jones)--Northern Telecom Ltd.'s
(NT) planned acquisition of Bay Networks Inc. (BAY)
kicks off what is expected to be a major wave of
consolidation among telecommunications-equipment
makers and data-networking companies as the lines
between voice and data communication blur.
The two industries are likely to converge in the years
ahead through mergers, analysts believe, as the big voice
equipment makers eye the faster-growing computer
networking industry and as they try to protect their core
businesses as more and more voice traffic travels over
data networks.
"Clearly the thrust is to focus on developing the future
public network equipment," said Hambrecht & Quist
Inc. analyst Erik Suppiger. "The future network will be a
data network with voice and data going over the same
public network."
Northern Telecom earlier said it has agreed to acquire
Bay Networks for about $9.1 billion. Under the terms of
the deal, Bay Networks stockholders will receive 0.6 of
a Northern Telecom common share for each Bay
Networks share. Based on Nortel's closing stock price
of 63 11/16 on Friday, this would value Bay Networks
at $38.21 a share.
Nortel's NYSE-listed shares were recently down 7
11/16, or 12.1%, at 56 on volume of 3.3 million,
compared with an average daily volume of 806,600.
Bay Networks' NYSE-listed shares were above their
Friday close of 28 5/16, but well below $38 a share.
The stock was recently up 3 7/16, or 12.1%, at 31 3/4
on volume of 8.3 million, compared with an average
daily volume of 5.3 million.
|
