E-mail
del.icio.us
Technorati
Digg
Here's something relatively unusual in recent technology M&A -- an acquirer's stock is actually getting a boost from a deal announcement. Chipmaker Emcore Corp. [EMKR] announced Tuesday morning that it would buy a piece of Intel Corp.'s [INTC] optical platform division for $85 million, and, lo and behold, its shares jumped 17%, to $13.71, in early trading. The Albequerque, N.M.-based company's shares have since settled down to $12.69, which represents a 9% gain.
That's still pretty impressive, especially in light of investors' reaction to several other semiconductor industry transactions.
There's ON Semiconductor Corp. [ONNN], which on Thursday announced a $915 million agreement to buy AMIS Holdings Inc. [AMIS]. ON's shares dropped 3.2%, to close at $8.54 on announcement day. ON shares were hovering around $8.10 in early afternoon trading Tuesday, a 1.2% drop for the day. Also last Thursday, wireless chipmaker Atheros Communications Inc. [ATHR] said after the market closed that it would buy u-Nav Microelectronics for $54 million. Its shares have dropped almost 5% since then.
Sure, the overall market's been edgy, and the outlook for the chip industry even edgier, but what's fueling Emcore's flight?
For one, the unit will generate $65 million in new revenues for Emcore in 2008, something the chipmaker needs to turn around the per-share losses it has been posting. The company said the deal will help its EPS become positive by the middle year. A big part of the surge might also have very little to do with the deal. Emcore Monday announced its fourth-quarter results, and the numbers from its photovoltaic device unit seem to be catching some solar wind. Sales from the unit soared 116% compared to last year.
It's tough to separate out how much of Emcore's stock performance is M&A driven, but at the very least, the company's shares are benefiting from some very good announcement timing. - Olaf de Senerpont
See Dec. 18 press release from Intel.com
See Dec. 13 story from The Motley Fool
