Hold on to this spinoff

Article Excerpt

VERIGY LTD. $14 (Nasdaq symbol VRGY; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 60.7 million; Market cap: $849.8 million; Price-to-sales ratio: 1.6; No dividends paid; TSINetwork Rating: Extra Risk; www.verigy.com) jumped to $29 in its first year following its spinoff from Agilent in 2006. However, it has not rebounded as strongly from the recession as its former parent. That’s why Verigy is now a takeover target. In November 2010, Verigy agreed to acquire LTX-Credence Corp. (Nasdaq symbol LTXC), a rival maker of computer-chip testing equipment. However, in December 2010, Japan-based Advantest Corp. (New York symbol ATE) offered to buy Verigy for $15.00 a share. Advantest is the world’s largest maker of chip-testing equipment. Verigy now feels that Advantest’s bid gives investors more value than merging with LTX. Under the terms of its takeover deal, LTX has until March 25, 2011, to revise its proposal. Verigy has gained 10% since it came out in favour of the Advantest offer, but still trades below…

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