To: Scrapps who wrote (7638 ) 2/17/2000 9:39:00 PM From: Boplicity Respond to of 9236
Newbridge takeover talk cites Alcatel as suitor (All figures in U.S. dollars unless noted.) By Susan Taylor OTTAWA, Feb 17 (Reuters) - Takeover speculation surrounding Canada's Newbridge Networks Corp. (Toronto:NNC.TO - news)(NYSE:NN - news), a telecoms network equipment maker, reached a fever pitch on Thursday, with market sources naming France's Alcatel SA as the sole serious suitor. Other potential bidders, including Swedish telecoms equipment maker Ericsson and German industrial and telecoms group Siemens , are believed to have dropped out of the race, leaving Alcatel alone in negotiations with Newbridge. Both Alcatel, the Paris-based telecommunications giant, and Newbridge declined comment. 'It's just a rumor,' said Newbridge spokeswoman Sarah Miller. 'We can't comment on it.' Several telecommunications analysts, industry sources, and traders, however, maintained Alcatel is the likely buyer. Newbridge has been the target of acquisition rumors since November, when it announced it had hired an investment banker and was open to offers after posting its sixth earnings warning in 10 quarters. Tera Capital Corp. fund manager Duncan Stewart said a key source told him Alcatel is in discussions with Newbridge. 'It will not be happening until after the quarter,' he said. 'We are running down the home stretch.' An announcement is expected 'shortly' after Newbridge reports its third-quarter results after North American markets close on Tuesday, he added. 'We hear that there is supposed to be a done deal and the one name that keeps coming up is Alcatel,' said a trader for a major institutional brokerage who asked not to be named. 'And we're stilling hearing the $42 (a share) price.' Newbridge shares were nearly 5 percent higher on the Toronto Stock Exchange in late trade on Thursday at C$51.85. In New York, the stocks gained 1-2/16 to trade at 35-11/16. A telecommunications analyst, who asked not to be named, also expected an announcement on Tuesday. 'What my sources are telling me, is that the buyer or potential buyers optimally would like to see the firm put out a big, good quarter beating the numbers,' the analyst said. 'That way, instead of buying a company that's broken, they're buying a broken company that's turned the corner and makes it easier for them to sell to their shareholders.' The consensus estimate from 17 brokers polled by First Call/Thomson Financial is that Newbridge will report a profit of 11 cents a share for its third quarter, ended January 30. The analyst said that sources suggest more than one firm may still be eyeing Newbridge. 'The indications I have is there's more than one player interested -- one of them very seriously,' the analyst said. 'You're in a situation where you don't know who it's going to be until you see the name on the paper. The odds are, and certainly the common denominator, keeps being Alcatel.' Pressure is growing on Newbridge to address takeover speculation because mounting rumors have raised the firm's stock, said an analyst with a large brokerage who did not want to be identified. 'The next time Newbridge speaks publicly they've got to talk about this -- and that's next Tuesday. And if they don't, then the stock's going (in the toilet).' ($1=$1.45 Canadian)