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VeriSign Cancels Appearances at Conferences, Fueling Takeover Speculation

VeriSign Inc. (VRSN) rose 7.6 percent on the Nasdaq Stock Market after canceling appearances at two investment conferences, fueling speculation that the company is in talks to be acquired.

Pulling out of two events without explanation suggests that a “significant corporate action may be pending,” said Ed Maguire, an analyst at Credit Agricole Securities Inc. in New York. While the company may be preparing to announce a new chief executive officer, a management change alone wouldn’t warrant the stock surge, he said.

The likely buyer would be a private-equity firm, which could shake up the company to boost profit, Maguire said. There have been more than 380 private-equity deals announced in the U.S. technology industry in the past year, with an average size of about $102 million and a premium of 48 percent, Bloomberg data show. VeriSign, which operates computers that direct Internet traffic, has a market value of $5.74 billion.

“VeriSign is an attractive (albeit expensive) target for private equity, given the highly recurring cash flows and untapped earnings leverage in the model,” Maguire, who recommends buying the shares, said in a report to clients.


VeriSign backed out of an appearance at a ThinkEquity LLC conference next week, following a cancellation of its presentation at a Citigroup Inc. gathering.
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