Da war doch noch etwas !!!!
Agere is finally free of spinoff restraints
It`s easier for former Lucent unit to acquire or to be bought.
By Jeanne Bonner
Of The Morning Call
Two years ago this week, Lucent Technologies completed its spinoff of Agere Systems. Now the rules governing the separation pose fewer restrictions on Agere`s ability to chart its own course.
The Hanover Township, Lehigh County, chipmaker will have greater freedom to pursue deals, either as the acquiring firm or the company to be acquired.
The tax law that governed its spinoff from Lucent effectively discouraged any company from acquiring a large stake of Agere`s stock within two years of the separation. It also limited Agere`s ability to issue large amounts of stock.
The passing of the two-year period may even allow Agere to consolidate its two classes of stock. And Agere will no longer have to consult with outside experts when it wants to issue more stock.
``They are the last chains from Lucent to fall off,`` said John Harmon, an analyst with Needham & Co., who has a ``buy`` rating on Agere`s stock.
Telecommunications equipment-maker Lucent spun off Agere, its former microelectronics division, in a two-step tax-free distribution of the new company`s shares. The first phase was Agere`s initial public offering of 600 million shares of class A common stock in March of 2001. Lucent distributed the remaining class A shares and a second class of stock, B shares, on June 1, 2002.
In the IPO, Lucent distributed more shares than the requisite 20 percent, placing the tax-free status in jeopardy, said James Miles, a professor of finance and a spinoff expert at Pennsylvania State University. In order to ensure the spinoff was tax-free, Lucent created two classes of shares that were distributed at different times.
Tax implications
Lucent also told Agere that if it issued large amounts of stock, the Internal Revenue Service, which granted the tax-free spinoff, could view it as part of the separation and Lucent would owe taxes on gains from the sale of the new shares. In compliance with its tax-sharing agreement with Lucent, Agere would have been responsible for paying those taxes.
Financial analysts who follow Agere`s stock don`t expect the company to do anything immediately, now that the restrictions have elapsed. But that doesn`t mean something won`t happen in the next six months or a year.
Up until now, semiconductor companies considering an acquisition would have ruled out Agere because of the tax implications. That will no longer be the case.
``That stock is cheap,`` said analyst Ping Zhao with CreditSights of Agere. ``If the stock remains that cheap … you would imagine someone will wake up someday and take a look at it. There are too many tech companies with lots of money around for someone not to think about buying Agere.``
Zhao, who has a ``buy`` rating on the stock, said Intel, the world`s largest chipmaker, is sometimes mentioned as a possible acquirer of Agere, which ranks No. 23. The two companies compete in chips for wireless local area networking, or Wi-Fi.
Analysts say Agere will probably not immediately issue a lot of shares for acquisitions. It has more than $750 million in cash to cover small acquisitions, and it has made two acquisitions by issuing relatively small amounts of stock. But the company now has more options.
``It opens the door to the possibility of using shares to make larger acquisitions,`` Harmon said.
Four votes per share
Agere`s two classes of shares both have voting rights to elect and remove officers and decide on matters such as reverse stock splits. The class A shares have one vote each for all matters, while the class B shares have four votes for the election and the removal of officers, and one vote on all other matters. As of April 30, 2004, more than 800 million shares of class A stock and more than 900 million shares of class B stock were outstanding.
Few publicly traded companies have two classes of stock, and those that do are typically run by a family that wants to retain control, said Miles, the Penn State professor.
``When you have high-vote stock outstanding and it is not held by management or family, that high vote makes it easier to take over the company,`` Miles said.
``You can see how Agere is vulnerable with this second class of high-vote shares. If some other company bought the shares, it would have the majority of the votes and all of a sudden it would be in control.``
With the new ability to issue large amounts of stock, Agere could potentially issue new shares of class A stock to raise money to buy back class B stock, Miles said. It could, alternately, convert the B shares to fractional A shares.
Zhao said she does not think Agere will get rid of the B shares soon. Agere spokeswoman Vibha Agrawal said the company does not have any immediate plans to change the two-class structure.
But several experts see no reason for Agere to keep both classes.
``It seems really logical to unify the shares,`` Harmon said.
In the two years since the spinoff, Agere has fulfilled the promise of separating from Lucent by winning business from other telecommunications equipment-makers such as Nokia and Nortel Networks. Lucent is no longer Agere`s biggest customer and in fact it does not contribute even 10 percent of its former division`s revenue.
Dismal stock returns
A company that is spun off typically enjoys strong stock returns for years after the separation, Miles of Penn State said.
Not so with Agere. Since its IPO more than three years ago, Agere has ridden a roller coaster. Its stock now trades at one-third of its IPO value. In the last three years, it has at times traded below $1, jeopardizing its listing on the New York Stock Exchange. The stock rebounded in October after the company declared its first profit but has since sunk to 52-week lows.
Agere became a publicly traded company during a general economic recession and at the heart of one of the worst semiconductor downturns in the sector`s history. It was saddled with $2.5 billion in debt. To stay alive, it laid off thousands of people, shuttered plants and sold off product lines.
``This sounds like sent them off in a lifeboat and said `Good luck,``` Miles said.
Agere`s shares have been trading below $3 on and off for the past year. The company decided not to pursue a reverse stock split, a move some analysts continue to question.
A reverse stock split would have boosted the value of the shares while reducing their number.
For the time being, Agere has two classes of shares that ended trading Thursday at $2.41 for class A and $2.29 for class B. But now it can make more of its own decisions about those shares.
Und ? Wer hat sich getraut und den Einstand verbilligt ???
Nun - ich bisher nicht ! Hatte eine andere "Baustelle"
LL+P - Jetok
