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Shares of Cogent slip after 3M says buyout offer is 'fair'

September 3, 2010 |  8:27 pm

Investors and traders in shares of Pasadena-based technology firm Cogent Inc. are losing faith that the company will fetch a sharply higher takeover price, even though some of the firm’s biggest holders object to its merger terms with conglomerate 3M Co.

Cogent’s shares slipped for a second straight session on Friday after 3M CEO George Buckley said he believed the takeover price was “fair” to Cogent investors. The stock eased 7 cents to $11.01, although it remained above 3M’s offering price.

From Reuters:

“The stock was trading in the $8 range, we offered in the mid-$10 range, I think it was a fair premium,” Buckley, who is also chairman and president at 3M, told Reuters Insider on the sidelines of the European House business conference.

“We expect to get more value by what we bring to the acquisition, but I think it was a fair price.”

Cogent, a 20-year-old firm that makes biometric security systems that identify fingerprints, faces and eyeballs, on Monday agreed to sell itself to 3M for $10.50 a share in cash, or $943 million.

The offer had the blessing of Cogent’s founder and CEO, Ming Hsieh. And because he owns nearly 39% of the stock directly, 3M already has a leg up in getting the deal done.

Still, Cogent’s shares jumped $2.18 to $11.09 on Monday, above 3M’s offer price, indicating that some investors and traders believed that a rival bidder would emerge or that 3M would raise its price. At least one analyst who follows Cogent called 3M’s offer “a steal.”

The stock rose again on Wednesday to finish at $11.23 after the company’s third-biggest shareholder, Pointer Capital, late Tuesday said it would “vigorously oppose” the deal. Pointer said it believed that Cogent was worth at least $15 a share.

At least two other significant shareholders, Iridian Asset Management and Corbyn Investment Management, joined Pointer in asserting that Cogent had agreed to too low a price.

Cogent has not publicly addressed the controversy over 3M's offer.

The stock’s slippage in the last two sessions suggests that takeover arbitrageurs are less certain of a higher bid. Still, anyone paying more than $10.50 a share must expect that that won’t be the final offer.

This could be settled soon: 3M said in its takeover announcement that it expected to launch a tender offer for Cogent’s shares within 10 days.

-- Tom Petruno