Tustin’s PairGain Rises Again on Rumor of Lucent Takeover

PairGain Technologies Inc. climbed $1.06 per share Friday, marking the second day of heavy trading after speculation that the phone-equipment maker might be the target of a takeover.

PairGain shares rose 5.6% to $21.31 in trading of nearly 11.7 million shares. Average daily volume is 4.7 million.

The trading frenzy began Thursday when investors speculated that PairGain, which makes products that transmit voice and data at high speeds over traditional copper phone lines, could be bought by Lucent Technologies Inc. or ECI Telecom Ltd. Both make equipment for digital phone networks.

The expectation of new business and a setback for a potential competitor helped drive PairGain stock up 15.2% Thursday, or $2.75, to $20.88 on Nasdaq volume of 17.2 million shares.

“The rumors were running around everywhere, even though it seems really unlikely that Lucent would make such a big investment right now,” said Tim Luke, an analyst at Lehman Brothers Inc.

Earlier this month, Lucent agreed to buy Octel Communications Corp., the world’s leading voice-mail company, for $1.8 billion in cash. That transaction will deplete most of Lucent’s cash reserve, analysts said.

PairGain officials declined to comment on the rumors, but admitted the company could be attractive to potential buyers. The stock reached a 52-week low on May 19, closing at $14.63 a share.

Staff at Lucent also refused to comment. Officials at ECI Telecom could not be reached for comment.