Gemstar International Group Ltd. shares rose Tuesday after United Video Satellite Group Inc. made an unsolicited $2.8 billion cash bid for Gemstar and its interactive television technology.
Gemstar stock rose $1.12, or 2.6 percent, to $43.62, in trading of 1.55 million shares, more than three times its three-month daily average. For the year ended March 31, Gemstar had revenue of $126.6 million.
United Video, which is controlled by two affiliates of Tele-Communications Inc., the No. 2 cable company, is offering $45 each for Gemstar’s 62 million shares outstanding. The offer is a 3.2 percent premium to Gemstar’s closing price.
The price is too low, said one longtime investor. Gemstar’s earnings potential, including revenue from licensing agreements, its interactive program technology and advertising revenue it could generate make the stock worth $70 to $100 a share as a takeover target, said Jim Cullinan, portfolio manager of the Robertson Stephens Emerging Growth Fund, whose holdings include 187,300 Gemstar shares. “Why would you sell the company now when you’re just ramping up the interactive programming guide?” he asked.
