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Technology Stocks : CrossKeys Systems Corp [CKEY and CKY/TSE] -- Ignore unavailable to you. Want to Upgrade?

To: Glenn McDougall who wrote (450)	3/4/1999 6:10:00 AM
From: Glenn McDougall	Respond to of 792

Architel soars after bid from Amdocs Shares still below offer Michael Lewis Financial Post Shares in the Canadian telecommunications software company Architel Systems Corp. soared yesterday after a $608.8-million bid from a U.S. rival. Architel stock jumped $6.10, or more than 25%, to $30 in heavy trading -- after doubling over the past four months -- but still failed to approach the price tendered by Amdocs Ltd. of St. Louis, Mo. Amdocs, which makes software used by phone companies to process orders, offered $24.52 (US), about $37.50, late on Tuesday for each Architel share, a 56% premium over their close earlier in the day. Under terms of the deal, each Architel common share can be converted into .95 of a new class of exchangeable share, which is to be traded on the Toronto Stock Exchange. Analysts said the gap between Architel's trading level and the bid should be sufficient to keep rival bidders at bay. As well, Architel would have to pay a $15.5-million (US) breakup fee if it accepted a competing offer. But Tony van Marken, Toronto-based Architel's president and chief executive, said the friendly deal may force competitors in the telecom software field to take "defensive action." That's because a combination of Architel and the much larger Amdocs would create an "end-to-end solution," for telecom customers, Mr. van Marken said. Amdocs reported revenue of $403.8 (US) or about $615-million for the year ended Sept. 30. Architel had sales of $18.7-million over the same period. "We feel this is the start of a consolidation in the telecom software space," comprising about 50 small-to-mid-sized companies, he added. Mr. van Marken said telecom customers want suppliers who can manage both front and back office functions, including order and invoice processing in the former category and network inventory control in the latter. "This deal will create the first global, independent provider of both solutions," he said. Amdocs said the combined company will have sales of about $500-million (US) and 3,600 employees in 25 countries. Architel, to remain in Toronto, would operate as a division of Amdocs under Mr. van Marken as president. The deal is expected to close in June and both companies said there will be no layoffs. Amdocs said the acquisition would have added immediately to earnings but for short-term amortization expenses stemming from Architel's purchase of Accugraph Corp. last year. As it is, the acquisition will add "a few cents" to analysts' earnings estimate of 63¢ (US) in fiscal 2000, said Don Baharav, chief financial officer of Amdocs. Architel's two major shareholders and management support the deal and have given Amdocs the option of acquiring their shares in support of the offer. Amdocs shares closed on Nasdaq yesterday at $223Ú16 (US) down $310Ú16 (US).