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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: Joar who wrote (4430)	4/27/2000 11:21:00 AM
From: Ajay Aggarwal	Respond to of 34857

Joar, the Nokia cheerleader, is dead wrong. Companies have good and bad news ! cnbc.com Faber: The Paper Chase by David Faber Wall Street Reporter When UPM-Kymmene {UPM} first approached Champion International {CHA} about buying the paper company, UPM favored a cash and stock transaction between $60-$68 per share. People close to the company tell me it was only at Champion's insistence that UPM structured its offer as an all stock ratio of 1.99 of its ADR's for each Champion share. Champion apparently preferred a tax-free stock deal to give its shareholders upside in the combined company and to have the feel of a merger rather than an acquisition. This piece of history becomes important in light of International Paper's unsolicited $64 cash and stock bid for Champion. For it clearly says that if UPM decides to counter that offer, it would appear to be comfortable doing so with an offer that includes a good deal of cash. In a conference call with investors today, UPM?s CEO said the company is waiting to hear if Champion?s board considers IP?s bid superior. Only then will UPM determine whether to embark on a renewed bid for the company. IP?s cash and stock offer is clearly superior to UPM in economic terms, though UPM has already received anti-trust clearance for its deal and can therefore close in a more timely manner. UPM?s CEO did not dissuade those on the conference call from thinking the company will compete with IP by raising its bid for Champion and including a potentially large cash component. In fact, the CEO said that, if necessary, UPM would have the resources to take on $8-$9 billion in debt. That amount would include both an all-cash offer for Champion and its own debt of $2.3 billion. UPM currently has a balance sheet with less leverage than IP and has roughly $1.3 billion worth of stock in Nokia {NOK}, after taxes. That amount could be applied towards the cash portion of any new bid. The company's advisor is Chase Manhattan {CMB}, which has created a large corporate finance and advisory business through its willingness and ability to lend at all levels of the capital structure. In fact, sources close to Chase tell me the bank is anxious to finish what it started. Nonetheless, UPM?s CEO said only that the company has not excluded any alternatives. Given the hit UPM's stock has taken since it announced its all-stock deal for Champion in mid-February, UPM would appear to have no other choice than to include a sizeable cash component in any new offer. However, it is possible that the company could come in with a cash and stock offer that is only a few dollars better than IP?s, and argue that it can offer a quicker closing and continued upside to Champion shareholders through the strength of the combination. Still, there is also a perception that UPM will be fighting a losing battle if it does come back, depending on how high IP might be willing to go in a bidding war. Bear Stearns said today it believes IP could bid as high as $74 per share, and still have the deal be non-dilutive to 2001 earnings, assuming a cost savings of $200 million. This is one reason why Champion shares are higher and trading above IP?s recent $64 offer.