In light of the uncertainty in CIEN's business for the foreseeable future, my guess is that ASND will not be willing to pay more than 3x ttm sales (and I'm being conservative, since ASND tanked for buying Stratus at 1X sales).
3x ttm CIEN sales translates to a market cap of roughly $1.5 - $1.6 billion, or around $15 per share.
Will CIEN sell out at this price? I don't think so. Otherwise, Nettles will be eating crow for not renegotiating with Tellabs for a third time (after the Pirelli shoe dropped), which many CIEN shareholders believe, would still have valued CIEN at a higher price than $15 per share.
There is one scenario, however, that may make ASND offer a higher price -- say, between $18 - 25 per share:
#1. If -- just like CSCO -- ASND can realistically project great long term synergy from the acquisition. By ASND standards, this means "1 + 1 = 3." I'm quoting Mory here, once when he was asked of his basis for agreeing to be acquired(and presumably agreeing to acquire).
#2. If LU declares WAR on ASND (by not buying it and instead buying a competitor or developing threateningly competing products in-house)-- if ASND can ascertain that it can successfully bundle CIEN's products with its own product line and lucratively sell this combo to its Telco customers, it may accept LU's challenge and purchase CIEN at a price agreeable to CIEN management and shareholders.
Perhaps the technology experts on this thread can discuss if this synergy is feasible, and what pricing and technical advantages exist
for an ASND/CIEN merger.
IMO, the two conditions above must be in place, in order for ASND to offer above $15 or above $20 per share for CIEN anytime soon(with the current negative perception about CIEN). |
