The floor on this deal, if Ascend accepts it, is 7:8, IMO.
Reasons:
o LU's willingness to accept some dilution; LU said late last year that they would accept mild dilution in a deal. I think 'mild' was the word they used, but it might have been another with similar meaning.
o significant synergies which make LU+ASND earn more than the two separately,
o recent ASND 99 EPS estimates as high as 1.8,
o ASND's squirreled-away revenue (didn't ship last week of 98, and reserved 100% against customer loans),
o ASND's higher (than LU) growth rate going into 2000,
o LU's $1.3 billion cushion this quarter, and very importantly
o if LU doesn't buy ASND now it will cost them more later for less: ASND has announced intentions to acquire more companies, companies that, while helping Ascend, probably overlap with Lucent.
o and, Mory wants $100, or there abouts. |
