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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: David Lawrence who wrote (30188)	4/26/1999 3:35:00 PM
From: Tim McGee	Read Replies (1) \| Respond to of 45548

These are all excellent points... Which is why i think LU is still the best suited to buy coms. They are the only company capable of paying the big premium. Otherwise it gets sold off in pieces. On the flip side of your argument, if COMS was taken over at $40, the shares in the purchasing company would likely rise dramatically. Every telecom and data player is trading at a huge premium compared to COMS. Any increase in the acquirer's shares then increases COMS buyout price. So if LU buys COMS (whole) in pooling interest and gives COMS holders .64 share. The deal would be accretive to LU adding about 17c/share earnings (assuming minimal transaction cost). LU shareholders pay 100x right now so its stock would go up by $17 resulting in a $10 increase in the purchase price for COMS. This doesn't even value the strategic value of some of COMS products to LU and assumes a rather low buyout price of $40. So its easy to see how the eventual buying price could move much higher. Remember when ASND got bought out by LU, it was in the 50s (agruably overvalued there). The premium made a ~$70ish value but the merger hasn't completed yet and ASND is trading at $99. You would have been called crazy for suggesting $100 for ASND back then just like one would be called crazy for suggesting COMS buyout for $60 or $80 now. Tim