Ambit prices secondary offering

Acer sells down a 4.8% stake in the modem manufacturer.

Goldman Sachs priced a small $50 million secondary offering on behalf of Acer last night (Monday). The 7.5 million unit deal reduced the group's ownership in Ambit Microsystems to 15.8% and was priced at a 3% discount to the stock's NT$121.5 close.

Observers said this was a smaller discount than a previous sale in January 2002, when Acer sold down roughly $56 million at a 4.8% discount. One DR equals two shares.

Books were said to have closed two times covered, with participation from a relatively large number of 50 investors, many of which were not previous holders of the stock. Geographically the book was said to have a split of 60% Asia, 22% Europe and 18% US.

The company selected a relatively good day to dispose of the stake, with the market re-finding its positive momentum and the TWSE closing up 2.1%. Ambit itself has underperformed the index so far this year and closed Monday up 7.52% on the year.

Founded in 1991, Ambit currently has a market cap of just over $1 billion and a freefloat of 56% pre deal. Until 2002, modems were the company's biggest source of business, but this has now been replaced by broadband and WLAN products, which accounted for over 81% towards the end of last year. This was supplemented by power modules on roughly 13% and packaging 4%.

It is trading on a 2003 P/E multiple of just over 14 times and a dividend yield of roughly 3.5%.

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