Logitech up on Microsoft bid talk, analysts wary

By Thomas Atkins

ZURICH (Reuters) - Shares in Swiss-based computer peripherals maker Logitech International SA rose as much as 12 percent on Thursday based on speculation Microsoft Corp would launch a takeover bid, traders said.

Analysts dismissed rumors of an $8 billion takeover bid as unlikely and Logitech board member Daniel Borel, the company's largest shareholder, said he had no reason to sell his 6 percent stake. He declined to comment on the speculation.

Such a deal would be Microsoft's biggest ever and while the world's largest software maker has recently shown a willingness to do bigger deals, it has focused most of its acquisitions on higher-margin Web and business software.

"I am a co-founder of Logitech. Would you be willing to sell your child?" Borel told Reuters in an interview.

"I have no reason to sell. But I will not be the one to decide. I own only some 6 percent so I will neither enable nor prevent a sale of Logitech."

Traders said rumors circulated that Logitech, with a market capitalization of about 7 billion Swiss francs ($6.3 billion), would receive a takeover bid at 48 francs per share from Microsoft.

This would be a premium of 38 percent to Wednesday's 34.80-franc closing price and value it at 9.16 billion francs.

"Rumors are rumors. I can't make any specific comment on them," Borel said.

A Logitech spokesman declined to comment. Microsoft said it does not comment on rumor or speculation.

A Logitech takeover would make the software leader the world's largest maker of computer mice and other peripheral devices as well.

"It seems out of left field. Microsoft has a small decent hardware business, but I don't see why it would do this," said Morningstar analyst Toan Tran.

Last year, Microsoft completed its biggest acquisition, paying $6 billion for digital advertising firm aQuantive.

Shares in Logitech pared gains later in the Zurich session and closed 5.8 percent higher at 36.70 francs. Microsoft shares fell 14 cents to $34.30 in afternoon Nasdaq trading.

HARDWARE

Logitech is the market share leader in PC mice, a market it has shared over the years with Microsoft which so far has showed little interest in using its market power to dominate a hardware segment such as this.  Continued...