Investors unfazed by Skype future; Adobe's timing may help to close deal; MSC entertains bids

By Cristal Cody

Tupelo, Miss., Sept. 17 - Whether the stake is sold or kept, eBay Inc. investors are not worried about what happens to Skype Technologies SA, an analyst told Prospect News on Thursday.

In other situations, counter bids to Adobe Systems Inc.'s $1.8 billion offer for Omniture, Inc. are a distinct possibility, but the Photoshop software maker could end up securing the deal without another move because of timing, a market source said Thursday.

Meanwhile on Thursday, a bidding war appears to be in the making for MSC.Software Corp., which received a revised takeover offer that matches a competing bid from a group of third-party private equity firms.

However, private equity firms are considered a "buyer of last resort," an analyst said in an interview Thursday.

On Wall Street, investors pulled back slightly.

The Dow Jones Industrial Average fell 7.79 points, or 0.08%, to close Thursday at 9,783.92.

The Standard & Poor's 500 index slipped 3.27 points, or 0.31%, to 1,065.49, and the Nasdaq Composite index closed down 6.40 points, or 0.30%, at 2,126.75.

eBay investors consider big picture

Joltid Ltd., a company owned by Skype founders Janus Friis and Niklas Zennstrom, has filed a copyright infringement suit against eBay and Skype that could derail the sale of a 65% stake in the internet phone company.

Joltid filed the suit in the U.S. District Court of Northern California alleging violations of the licensing agreement for the phone technology used by Skype.

On Sept. 1, eBay agreed to sell a 65% stake in Skype for $1.9 billion in cash and a note for $125 million to an investor group that includes private investment firm Silver Lake; Andreessen Horowitz, a venture capital firm from Netscape cofounder and eBay board member Marc Andreessen; global venture capital firm Index Ventures; and the Canada Pension Plan Investment Board.

The Skype sale requires the investor group to agree to any settlement with Joltid.

An analyst told Prospect News on Thursday that the lawsuit hasn't upset investors.

"Either Skype stays on the books, in which case the numbers go back up again, or they get rid of the distraction and nothing really changes," the analyst said. "Investors would rather focus on whether the company turns things around or not. The prospects of a lawsuit have been out there since the IPO plans have been out, so this is not a real surprise to anybody."

Initially, eBay had considered separating Skype through an initial public offering in 2010.

eBay purchased Skype from its founders in 2005 for $2.6 billion.

The sale of the 65% stake is expected to close in the fourth quarter.

On Thursday, the analyst noted that he hadn't "fielded a single call on Skype from investors. It was an annoyance when it was on the books, and it's an annoyance on its way out."

Shares of San Jose, Calif.-based eBay rose 11 cents, or 0.45%, to close at $24.43.

Adobe perfects deal timing

Adobe's offer of $21.50 a share in cash represents a premium of 24% over Omniture's closing stock price on Tuesday, but the deal still could attract rival bidders, a market source said Thursday.

Shares of Omniture closed up 2 cents, or 0.09%, at $21.90 on Thursday.

Adobe's timing and plans for a quick tender offer suggest the company "could be rushing to pre-empt a logical counter bid," the market source said.

Adobe expects the acquisition of Orem, Utah-based Omniture, which produces online business analysis platforms, to close in the fourth quarter.

"We believe that there are at least four potential counter bidders for the company," the market source said.

Potential counter bidders include Redmond, Wash.-based Microsoft Corp., Sunnyvale, Calif.-based Yahoo! Inc., Mountain View, Calif.-based Google Inc. and Dublin-based WPP Group plc.

Microsoft is considered the obvious bidder, but the company is "currently occupied" with seeking regulatory approval for its search engine partnership with Yahoo!, the source said.

"We believe that by optimally timing its bid, Adobe is likely to get away with its bid," the analyst said.

Shares of San Jose, Calif.-based Adobe lost 51 cents, or 1.53%, to close Thursday at $32.84.

Microsoft shares closed up 10 cents, or 0.40%, at $25.30, while Yahoo!'s stock added 51 cents, or 3.00%, to close at $17.50.

Google shares rose $3.43, or 0.70%, to $491.72.

Shares of WPP fell 82 cents, or 1.82%, to $44.14.

MSC attracts incremental rival bids

MSC said Thursday it is evaluating the new revised bid of $8.15 a share in cash from Palo Alto, Calif.-based Symphony Technology Group LLC and its subsidiary, Maximus Holdings Inc.

Symphony matched the $8.15-a-share offer made by a group of third-party private equity investors earlier this week.

MSC said in a statement that its board is "carefully considering the Symphony revised offer and the third-party offer."

The Santa Ana, Calif.-based simulation and software company had agreed in July to a deal with Symphony for $7.63 a share, but then it received a rival offer for $8.00 a share earlier this month from the private equity group.

After Symphony matched the offer, the group raised the bid to $8.15 a share.

The bidding war is likely to be only in incremental steps, if it continues much longer, Mark Schappel, an analyst with the Benchmark Co., told Prospect News on Thursday.

"Symphony is not going to go much over $8.00 - they're going to try to claim they have the superior proposal," he said. "They put their proposal in a couple months ago. It's getting toward the end of the game and MSC can wrap this up quickly, whereas if MSC entertains this new proposal, it'll start another couple-of-months process."

MSC has not released the name of the other bidder, which is somewhat "peculiar," Schappel said.

"It's a little bit of James Bond intrigue here," he said.

However, "private equity firms in the software world are typically viewed as a buyer of last resort because they don't pay up," Schappel said. "There's no strategic value here - they could shut it down."

MSC shares closed up 4 cents, or 0.49%, at $8.21 on Thursday.

Mentioned in this article:

Adobe Systems Inc. Nasdaq: ADBE

eBay Inc. Nasdaq: EBAY

Google Inc. Nasdaq: GOOG

Microsoft Corp. Nasdaq: MSFT

MSC.Software Corp. Nasdaq: MSCS

Omniture, Inc. Nasdaq: OMTR

WPP Group plc Nasdaq: WPPGY

Yahoo! Inc. Nasdaq: YHOO

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.