Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: Dennis J Baltz who wrote (13880)	11/2/2000 2:42:46 PM
From: djia101362	Respond to of 24042

Dennis, I'm not Pat but IMO the chances of the JDSU/SDLI merger NOT going through are very remote. Management has said they will do what ever is required to complete the deal. It is expected that JDSU will have to divest itself of its 980 nm pump laser division. SDLI's 980 nm PL are considered to be superior and big reason for the merger and therefore selling off JDSU's division is not a problem. The JDSU/ETEK merger would appear to have had more regulatory hurdles to clear and that did just fine. Obvioulsy if the merger were a "lock", we wouldn't have this arb spread of about 20%. But just for discussion purposes, if the merger were did not go through, here is what I think would happen. JDSU and SDLI were trading at about 115 and 295 respectively, the day before the merger. The day the merger was announced, JDSU went down to about 100 and SDLI went up to about 325. A natural reaction on a failed merger would be the unwinding of the stock action the day the merger was announced. But since both stocks are significantly lower that may not be the case. Since the merger was announced on July 10, both JDSU and SDLI have come out w/ excellent earnings reports for both the Jun & Sep quarters. Earnings visibility has increased and both companies are firing on all cylinders. I would expect both stocks to go up from these price levels in a failed merger, this is not the same answer I'd give if both stocks were are the prices they were at on July 10, then I'd say we'd get the unwinding effect.

To: Dennis J Baltz who wrote (13880)	11/2/2000 2:44:07 PM
From: Dalin	Respond to of 24042

Also, what do you think will happen to JDSU and SDLI if the merger doesn't go through? How much do you think JDSU and SDLI will drop? Actually, JDSU should go up....it took a big hit from the price it was paying for SDLI. But it would probably go down anyways, in this goofy market. <g> :0) D.

To: Dennis J Baltz who wrote (13880)	11/2/2000 3:12:15 PM
From: sam	Read Replies (1) \| Respond to of 24042

If the deal were undone the knee jerk reaction would be a quick rise in JDSU and a drop in SDLI -- as the arbs bail from the deal. When the dust settles, SDLI will probably be the bigger gainer...from these levels. Though both will do very nicely. That said, together they will do MUCH better than each can do alone. Still no reason to think the deal wont go through though. Actually there never was any real doubt. Cramer -- a lawyer no less -- made some noise that he thought the deal would not go through. But we know how accurate he is in understanding the fundamentals behind JDSU. ;)

To: Dennis J Baltz who wrote (13880)	11/3/2000 1:32:02 AM
From: pat mudge	Read Replies (4) \| Respond to of 24042

You once said you were invested in SDLI instead of JDSU because of the 15% bump you would get when the merger is approved. Is this still your position? I still have my core SDLI holding. I did sell some trading shares at a loss during the big drop and couldn't buy back in at the bottom b/c of the wash rule. I picked up JDSU as a surrogate. Losing the spread was hard but losing the tax lose would have been harder. (Not selling would have been the best of all --- but that's hindsight.) I don't know what will happen if the merger doesn't go through. If I had any confidence in Wall Street's ability to sort out the dynamics, I wouldn't be worried. However, I suspect they think a fall-out would be a plus for JDSU and a minus for SDLI, when in reality it's not that simple --- JDSU is relieved of a huge acquisition charge but also is left without the products it needs for 40 gig; while SDLI is left without increased manufacturing capabilities but is still the leader in advanced components and modules. Not to mention the fact it would be a sitting duck for those who bid on it earlier. When does a spread normally begin to close? Pat