Amplified story from Briefing:
CIENA CORP (CIEN) 23 1/8 -5 5/32. What began as rumors drifting through the market are now fact: CIENA's technology has once again been passed over. According to CNBC, the company has lost the bidding on a Digital Teleport contract, worth approximately $100 million, to Pirelli Cables and Systems. News has knocked CIEN shares an additional 18% lower, on volume of 8.9 million (compared to avg. daily turnover of 3.7 mln). While investors/speculators are clearly wagering that this is the straw that will finally break the back of the proposed Tellabs/CIENA merger, Tellabs (TLAB 45 5/16 +1 7/8) CEO is downplaying CIENA's latest failure and is reaffirming the company's intention to proceed with the acquisition of the company. Based on the revised terms of the deal, Ciena shareholders to receive 0.80 Tellabs shares for each of their own (vs 1-for-1 stock swap Tellabs originally proposed in June). Assuming that the merger were to go through (and that investors didn't dump TLAB shares on news of finalization-- which is very unlikely), the deal would be worth $36.25 per share to Ciena shareholders. Since the proposed Ciena/Tellabs merger was announced in June, CIENA has issued both an earnings warning and released news that AT&T would not pursue further evaluation of CIENA's dense wavelength division multiplexing (DWDM) systems. According to CIENA, it had expected less than $50 million in 1999 revenues from any potential AT&T contract. CIEN shares have tumbled 60% since the proposed merger was first announced, and have contributed to a 28% decline in TLAB shares, from $65.875.
|
