March 25, 2009 / 3:46 PM / 8 years ago

UPDATE 1-MEMC shares up on takeover chatter

3 IN. DI LETTURA

(Changes source, adds analyst comments, details)

By Bijoy Koyitty and Purwa Naveen Raman

BANGALORE, March 25 (Reuters) - Shares of MEMC Electronic Materials Inc WFR.N, which makes silicon wafers for the semiconductor and solar industries, rose as much as 14 percent on speculation that the company received a takeover offer from German chemicals group BASF BASF.DE.

However, analysts said they doubted there was such a proposal and MEMC is not seen as an acquisition target.

"At these price levels, I think the stock is rich, the valuation is high. I think it's primarily a rumour," Hapoalim Securities USA analyst Gordon Johnson said by phone.

MEMC is an attractive target at $10 to $12 from a valuation perspective, Johnson said.

MEMC and BASF were not immediately available for comment when contacted by Reuters.

Shares of the company pared some of their early gains and were trading up 6.3 percent at $17.12 in afternoon trade on the New York Stock Exchange.

"I don't think that MEMC is looked at as an acquisition target because its key end markets are facing significant pressure and I think that any buyer who knows these markets will know that MEMC will reach a lower price later this year," Johnson said.

The company's stock has fallen 80 percent in the last one year.

"It is a rumour, it is very hard for us to view this as a strategic situation," said Ben Pang of Caris & Company.

"MEMC Electronic shares and its call options are active on takeover speculation," said Frederic Ruffy, options strategist at New York-based Web information site WhatsTrading.com.

Investors are actively buying April calls with strike prices ranging from $17.50 to $22.50, expecting that the stock might continue moving higher over the short term, he said.

So far 22,000 call options, which give buying rights to the company's shares, have traded in MEMC, more than six times the norm, according to option analytics firm Trade Alert.

MEMC, which has been struggling with continued deterioration in end demand for semiconductor products, had forecast weak first-quarter revenue in January. (Additional reporting by Doris Frankel; Editing by Anil D'Silva)

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