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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Rande Is who wrote (13129)	10/5/1999 8:54:00 AM
From: M. Walton	Read Replies (1) \| Respond to of 57584

Rande... a follow up to my recommendation on TGO. MW _____ Teleglobe shares jump on takeover rumours by Mark Evans - Tuesday, October 5, 1999 Teleglobe Inc. shares climbed 10 per cent yesterday amid speculation the the international long-distance carrier is a takeover target. Teleglobe gained $2.60 to close at $28.10 on the Toronto Stock Exchange. It has rebounded 40 per cent since hitting a 52-week low of $20.10 last Thursday. Analysts said the Montreal-based company's return to grace has much to do with a bidding war brewing south of the border between Jackson, Miss.-based MCI WorldCom Inc. and Atlanta-based BellSouth Corp. for long-distance carrier Sprint Corp. Sprint of Kansas City, Mo., is part of the Global One alliance with Deutsche Telekom AG and France Telecom SA. But Global One, which serves multinational companies, could break apart if MCI WorldCom's $93-billion (U.S.) bid for Sprint proceeds because MCI Worldcom already has its own global network. If Deutsche Telekom and France Telecom pull out of Global One, it could make Teleglobe a hot commodity for telephone carriers looking to acquire a stake in or align themselves with a long-distance company, said Dvai Ghose, an analyst with CIBC World Markets Inc. "The Sprint-MCI-Worldcom bidding war makes Teleglobe more valuable because of breakup of alliances," Mr. Ghose said. Another rumour rumbling through the market is that Montreal-based BCE Inc. and Chicago-based Ameritech Corp., which owns 20 per cent of Bell Canada, may also be interested in Teleglobe. BCE already owns 20 per cent of Teleglobe. Ameritech has extensive operations in Europe. Mary Anne Demonte-Whelan, an analyst with Kearns Capital, said a takeover of Teleglobe or an equity infusion by BCE and Ameritech would be beneficial to all parties. "Ameritech has valuable assets in Europe, and Teleglobe's assets could connect those Ameritech assets." she said. At current prices, it would cost BCE $5.6-billion (Canadian) to own 100 per cent of Teleglobe, while it would cost $2.1-billion to increase its stake to 51 per cent. Teleglobe's largest shareholder is Kenny Trout, who acquired 22 per cent of the company after Teleglobe purchased Dallas-based long-distance carrier Excel Communications Inc. last year. Charles Sirois, Teleglobe's chairman and chief executive officer, owns 9 per cent while Perigee Investment Counsel Inc. and Ontario Municipal Employees Retirement Board also own positions. Although BCE has a war chest of more than $5-billion after selling the stake in Bell to Ameritech in March, International Data Corp. (Canada) Ltd. analyst Jordan Worth said a takeover of Teleglobe would be unlikely. "I don't think that it would make sense for BCE to sink more money into Teleglobe," Mr. Worth said. "In terms of growth, Bell is better situated to stick with what they've got." Teleglobe spokesman Michele Beaubien declined to comment about the rise of Teleglobe's shares or speculation surrounding its future. "These are rumours, we have nothing to say," she said. Last week, Teleglobe said it expects profit this year to be 48 to 50 cents (U.S.) a share -- about half of its initial estimate. The company said its long-distance profit margins are being hurt by intense competition in domestic and international markets.