Tuesday, April 20, 1999
Convergys' Wiztec bid may be low
Some investors disdain offer
BY MIKE BOYER
The Cincinnati Enquirer
Convergys Corp. might have to sweeten its $55 million bid to acquire the remaining 30 percent of Wiztec Solutions Ltd. it doesn't already own because of the Israeli software company's better-than-expected results, some analysts and investors say.
Cincinnati's Convergys late last month launched an $18.30-a-share offer for almost 2 million shares of Wiztec to expand its international presence and streamline its control over the growing company. Wiztec develops billing software for the pay TV market.
Convergys said the offer initially represented a 10 percent premium over Wiztec's stock price, but some analysts said it doesn't fully reflect the company's value.
Robert Goldman, analyst at Josephthal & Co., told Bloomberg Business News that, given Wiztec's improved earnings outlook, Convergys should at least boost its offer to match Wiztec's record 52-week close of $20.871/2.
A spokesman for Convergys didn't return e calls for comment Monday.
“The rational thing would be to offer the shares at a more equitable value,” Murray Forman, vice president at Continuum Capital Co., told Bloomberg News. “At this point, there are enough people sympathetic that I doubt it will go through.”
Continuum is a $100 million fund that owns more than 200,000 Wiztec shares.
An Israeli investor Tamir Teshuva, who has doubled his holdings to 27,000 shares, told Bloomberg, “I will not accept an offer below $25.”
But Pete Sorrentino, director of equity research at Cin cinnati's Bartlett & Co., said the Convergys offer is fair.
The fact the stock hasn't moved much since the tender offer was announced indicates the market feels the offer is fairly valued, Mr. Sorrentino said. Bartlett holds about 4,000 shares of Wiztec.
Convergys , which reported higher first-quarter sales and earnings Monday, closed up $2.121/2 at $18.871/2. Wiztec, which is traded on the Nasdaq, closed Monday at $18.371/2, up 121/2 cents.
Mr. Sorrentino added that lately, high-tech stocks have fallen somewhat out of favor and that tends to make Convergys' offer more appealing.
Convergys' tender for the Wiztec shares is to expire April 28.
According to tender offer documents, Wiztec is expected to earn $7.6 million on revenues of $28.7 million this year, up from earnings of $5.62 million on revenues of $20.3 million this year.
At least four shareholder lawsuits pending in Hamilton County Common Pleas Court that name the companies and key officers. The suits contend that since Convergys controls Wiztec, the negotiation of the tender price didn't represent a true arms-length transaction.
Convergys purchased a 20 percent stake in Wiztec in late 1997 and acquired control of the company in early March when it acquired 50 percent of the stock for $15.25 a share.
headEARNINGS
Cincinnati's Convergys Corp. reported higher earnings and revenues for the first quarter.
The customer care and billing services provider said net income for the three months ended March 31 increased 34 percent to $32.4 million from $24.1 million in the same period last year. Share earnings increased 24 percent to 21 cents a share, the company said.
Revenues rose 30 percent to $399.8 million from $308.6 million a year ago.
Acquisitions and subscriber growth fueled the revenue gains, said Convergys, which was spun off from Cincinnati Bell Inc. The results included $7.6 million, or 3 cents a share, in equity income from Convergys' minority stake in Ameritech Cellular Services. That compares with $4 million, or 2 cents a share, last year.
EU concedes on banana rules
Convergys' Wiztec bid may be low
Comair to break ground on corporate building
Tent-renter branching out
GM-Toyota link start of merger?
Nasdaq plunges on tech sell-off
TRISTATE BUSINESS SUMMARY
INDUSTRY NOTES: BANKING
TRISTATE MARKET SPOTLIGHT
