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Technology Stocks : The Learning Company (TLC)
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To: Greg R who wrote (6179)12/14/1998 5:58:00 PM
From: Carmine Cammarosano   of 6318
 
Robbie Stephens downgrades
by: HeardRumors
1870 of 1885
Synopsis:

The following synopsis is qualified in its entirety by the more detailed information contained in the full research report, including the discussion of certain risks associated with an investment in this security contained in "Investment Risks."

Mattel (MAT $24 1/2) this morning announced the acquisition of The
Learning Company in a pooling with an announced value of $3.8 billion, or $33 per share.

Under the terms of the deal, TLC shareholders will receive between 1.0 and 1.2 MAT shares for each share of TLC. The exchange ratio is fixed at 1.2 MAT shares at or below a MAT price of $27.50, and at 1.0 MAT shares at or above $33, with the share exchange value fixed at $33 in between. At MAT's current $24 1/2 share price, TLC shareholders would receive Mattel stock valued at approximately $29 1/2.

We expect tomorrow's 8K SEC filing to hold more detail about the deal, as well as about any possible breakup fees. In the meantime, we have no reason to believe that the deal will not go through as announced, and believe that TLC will trade near $29.

This TLC/MAT deal will likely be highly synergistic and the combined
company will doubtless hold a strong position in the market for educational
software and toys. Nevertheless, we are concerned that TLC shareholders
will see more limited appreciation potential in the wake of this transaction.

We are lowering our rating from Strong Buy to Long-Term Attractive. We
had previously believed that TLC could trade to our $40 12-month price
target, but now expect share pricing to be tied to Mattel.

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