No Yahoo, Microsoft deal seen ahead; Sierra tender for Wavecom gets regulatory OK, likely to close

By Cristal Cody

New York, Jan. 14 - A new leader at Yahoo! Inc. renewed hopes of a deal with Microsoft Corp., but a sale or merger anytime soon probably isn't in the cards, a company analyst said Wednesday.

Also Wednesday, Vancouver, B.C.-based Sierra Wireless, Inc. opened its cash tender offer for Wavecom SA of France at €8.50 ($11.20) a share. The deal has its risks but should close, an analyst told Prospect News.

In other news, Advanced Medical Optics, Inc.'s merger agreement with Abbott Laboratories includes a breakup fee of $98.5 million and a July 31 termination date, according to a filing with the Securities and Exchange Commission.

Moving to the Street, retail sales fell worse than feared according to the Commerce Department's December retail sales report.

The report combined with new banking fears to cast a gloom Wednesday and sent the Dow Jones Industrial Average down 248.42 points, or 2.94%, to 8,200.14.

The broader indexes saw bigger declines, with the S&P 500 index down 29.17 points, or 3.35%, to 842.62 and the Nasdaq Composite index off 56.82 points, or 3.67%, to 1,489.64.

Yahoo expected to stay single

Carol Bartz was selected as Yahoo's new chief executive to replace Jerry Yang, who turned down a deal with Microsoft last year. Bartz most recently was executive chairman of Autodesk Inc.

Yahoo president Sue Decker announced that she, too, will leave the company.

All the changes spurred new deal speculation Wednesday, but no new immediate negotiations with Microsoft are expected, said Heath Terry, an analyst with Friedman, Billings, Ramsey & Co.

"We interpret Bartz' parting message on the conference call that what Yahoo needs most is 'breathing room' as an indication that no deal with Microsoft is imminent," he said in an investors note on Wednesday.

"While investors may optimistically hope that Bartz will clean up Yahoo for sale, we believe the majority of the board and senior management continue to see Yahoo's future as a stand alone company and that she was hired with the long term in mind," Terry said.

"While Microsoft likely remains interested in acquiring Yahoo's search traffic, we don't believe Yahoo will sacrifice what they view as a long term strategic asset for a short term financial benefit."

Analysts expect Bartz to bring strong organizational skills to the role.

She is "as good a hire as Yahoo could expect," Terry said. "The lack of focus and organization at Yahoo cover the majority of the company's addressable challenges in our opinion."

Yahoo's stock rose 31 cents, or 2.56%, to close at $12.41.

Shares of Microsoft fell 73 cents, or 3.68%, to $19.09 in trading Wednesday.

Wavecom tender offer opens

Sierra Wireless said Wednesday that the acquisition of Wavecom has received early termination of the waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvement Act requirements and has received clearance from the Autorite des marches financiers.

Sierra Wireless must receive 51% of the shares in the tender offer to close the deal. The offer expires Feb. 12.

The transaction is expected to close in the first quarter of 2009. The deal comes with a few risks but is likely to close, a market observer told Prospect News.

"Wavecom is in France and Sierra is in Canada, so integration is one of the aspects we'll pay close attention to," an analyst said Wednesday. "The premium that Sierra offered would be enough [to convince shareholders to tender shares]. I think they would want to take the premium and be happy."

Sierra Wireless also will pay €31.93 ($42.06) per outstanding Oceane convertible bond.

Shares of Sierra Wireless fell 16 cents, or 2.66%, to close Wednesday at $5.86, while Wavecom shares rose 15 cents, or 1.37%, to $11.10.

Wavecom's stock is up from the $7.74 shares traded on the day before the deal was announced Dec. 2.

Abbott buyout

According to Advanced Medical Optics' merger agreement with Abbott Laboratories filed on Tuesday, the $2.8 billion deal includes a breakup fee of $98.5 million that must be paid within three days if the deal is terminated.

Abbott made the offer to acquire the company for $22.00 a share on Monday.

Abbott plans to start the tender offer by Jan. 26.

Advanced Medical Optics shares rose 6 cents, or 0.28%, to close Wednesday at $21.60.

Shares of Abbott fell 59 cents, or 1.18%, in trading to $49.47.

The deal is subject to antitrust clearances from the Federal Trade Commission and the European Union Commission.

The acquisition is expected to close in the first quarter of 2009.

Mentioned in this article:

Abbott Laboratories NYSE: ABT

Advanced Medical Optics, Inc. NYSE: EYE

Microsoft Corp. Nasdaq: MSFT

Sierra Wireless, Inc. Nasdaq: SWIR

Wavecom SA Nasdaq: WVCM

Yahoo! Inc. Nasdaq: YHOO

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