And if anyone forgets to read the article
biz.yahoo.com
Monday June 15, 3:06 pm Eastern Time
Excel shrs off as takeover terms disappoint
NEW YORK, June 15 (Reuters) - Excel Communications Inc.'s announcement of a ''merger of equals'' with Canada's Teleglobe Inc.(TGO.TO - news) on Monday led to a nearly 20-percent drop in Excel shares as the terms disappointed investors, traders said.
In afternoon NYSE trade, Excel lead the Big Board percent-declines with an 19-percent tumble, or 5-1/4, to 22-7/16 on volume of more than 1.3 million shares, about four times the daily average.
''There is a lot of fast money (in Excel) that is now getting out'' because the the deal valued Excel below the share market price, said one trader referring to a buildup, and exodus, of speculative Excel investors.
Under the definitive agreement, Teleglobe will exchange 0.885 shares of its stock for each Excel share, which, based on Friday's closing prices, would value each of Excel's 136 million outstanding shares at about $22.84 a share, or $3.11 billion. Excel shares closed Friday at 27-9/16.
An Excel spokeswoman said the deal was signed Sunday.
Meanwhile, Teleglobe's NYSE-trade shares added 1-1/4, to 52-7/8.
In a media conference call, Excel Chairman and Chief Executive Kenney Troutt responded to a question about the below-market price, which traders called a ''takeunder.''
''When we started negotiations, (Excel shares) were in the low 20s and only when some of the word began leaking out we started to rise in the last 10 days, and especially in the last day (Friday),'' he said. The companies were in talks for about one month, he said earlier.
On Friday, Excel shares added nearly two points.
Troutt added that when he and Teleglobe Chairman Charles Sirois started negotiations, ''we decided that we wanted to do it as a merger of equals. It just happened to run up on speculation that Excel was going to get a premium. We made a long-term decision, not a short-term decision.''
NOTE:
Lets see, the stock a month ago was below 22 for ECI and over 50-51 for TGO - as it is now.
So, any run up was based on rumours - and speculation.
Once again, speculators ran up the stock - and got burned for it.
Serves those right for spreading rumours and for those believing them.
Oh, one other thing those complainers keep forgetting - this deal will not close until mid 1999 at the latest - a lot of time for the price of TGO to go back up (or down) - nothing is final on the price yet - remember that.
Charles Holcomb |
