NEW YORK (TheStreet) -- Shares of LED equipment makers Veeco (VECO) and Aixtron (AIXG) are rising on Friday morning after a Reuters report that LED sector bellwether Cree (CREE) might make a bid for Aixtron.
Several financial news sites -- citing a story from a Reuters European desk -- reported that Cree was considering a bid of 38 euros per share for Aixtron. The report cited anonymous trader sources for the Cree bid, though the original Reuters international report was not immediately available.
If it's the case -- and an investor should keep in mind that the LED sector is one in which traders have the reputation of planting rumors to drive trading in shares -- Aixtron was not rising to a level that reflected a 38 euro offer.
Aixtron shares were up 3%, to slightly above $40. A 38 euro bid share would value the German LED equipment maker between $49 and $50.Veeco shares were up by more than 2% in early trading, while Cree shares were flat. If anything, the M&A rumors in the LED space highlight the fact that there is a logical thesis to be made for some consolidation. Veeco, in particular, has always been rumored as a takeout candidate, but speculation has usually centered on the big players in the semiconductor space, like Applied Materials (AMAT) and Novellus (NVLS). To make a case for Cree buying an LED equipment maker requires some logical assumptions that can be shot down with equally logical counter arguments. Mark Miller, analyst at Noble Financial Group, who has long believed that there is unlocked value in Veeco shares by way of an eventual takeout, says that as the LED market grows cost becomes a more important factor, and players like Cree will pursue each and every opportunity to lower cost. The LED market is transitioning from a period of explosive growth to a more mature market and in this stage of the industry's evolution, the lowest-cost opportunity becomes more important. More and more low cost LED suppliers from Asia, and in particular from China, are expected to join the market. Cree has acknowledged in recent commentary that driving down cost is a major focus for the company.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV