Macy's stock jumps on rumors of buyout - Harley-Davidson also subject of speculation
Macy's stock jumps on rumors of buyout - Harley-Davidson also subject of speculation
Copyright © 2007, Chicago Tribune and Bloomberg News
Published June 23, 2007
NEW YORK -- Shares and stock-option volume of Macy's Inc. and Harley-Davidson Inc. surged Friday on speculation the companies could be bought.
Macy's stock climbed $2.56, or 6.6 percent, to $41.43, on the New York Stock Exchange. It was the largest jump since November 2005.
"There is talk of a private-equity buyout this weekend" at $52 a share by Kohlberg Kravis Roberts & Co. and Goldman Sachs Group Inc., said Marc Weinberger, head trader at W. Quillen Securities in New York. At that price, the company would be valued at $23.9 billion.
Jim Sluzewski, a spokesman for the Cincinnati-based department-store chain, said the company doesn't comment on market speculation. David Lilly, a spokesman for KKR, and Goldman Sachs spokesman Michael DuVally declined to comment. The former Federated Department Stores Inc. changed its name to Macy's this month.
Trading in call options to buy the company's shares surged to a record 121,312, more than 35 times the 20-day average. The price of the most actively traded contracts, July calls at $42.50, jumped sixteenfold, to $1.70 from 10 cents. Each call option gives investors the right, without the obligation, to buy 100 shares of a company at a specified price by a given date.
Trading in options to buy shares of Milwaukee-based Harley-Davidson also jumped to a record on speculation that the nation's biggest motorcycle-maker might be acquired by the world's biggest, Honda Motor Co.
A combined firm would command as much as 60 percent of the U.S. motorcycle market, said Tim Conder, an analyst with A.G. Edwards & Sons in St. Louis.
The number of call options traded jumped to 49,848. Volume hadn't exceeded 25,000 contracts since October 2005. The most active call, which gives investors the right to purchase Harley-Davidson shares at $70 by July 21, rose sevenfold in price, to 35 cents.
"There are rumors of a potential takeover," said Frederic Ruffy, an options analyst at Redwood City, Calif.-based Optionetics.com. "Investors think it's credible. They expect an announcement in the short term and a big move in the stock."
Shares of Harley-Davidson increased the most since October, adding $2.43, or 4 percent, to $62.55, on the NYSE after touching $63.99 earlier in the session.
Conder called the speculation "false" because an offer from Honda might not survive Federal Trade Commission scrutiny and a merger might "alienate U.S. customers."
Bob Klein, a spokesman for Harley-Davidson, declined to comment. A Honda spokesman didn't return a call.
Traders "are looking to get as much leverage as possible" by buying contracts that expire next month at a strike price that's more than $7 higher than Harley-Davidson's share price, Ruffy said.
"That's a sign they expect something soon because it would take a major announcement to push the stock up to $70," he said.
Copyright © 2007, Chicago Tribune and Bloomberg News
Published June 23, 2007
NEW YORK -- Shares and stock-option volume of Macy's Inc. and Harley-Davidson Inc. surged Friday on speculation the companies could be bought.
Macy's stock climbed $2.56, or 6.6 percent, to $41.43, on the New York Stock Exchange. It was the largest jump since November 2005.
"There is talk of a private-equity buyout this weekend" at $52 a share by Kohlberg Kravis Roberts & Co. and Goldman Sachs Group Inc., said Marc Weinberger, head trader at W. Quillen Securities in New York. At that price, the company would be valued at $23.9 billion.
Jim Sluzewski, a spokesman for the Cincinnati-based department-store chain, said the company doesn't comment on market speculation. David Lilly, a spokesman for KKR, and Goldman Sachs spokesman Michael DuVally declined to comment. The former Federated Department Stores Inc. changed its name to Macy's this month.
Trading in call options to buy the company's shares surged to a record 121,312, more than 35 times the 20-day average. The price of the most actively traded contracts, July calls at $42.50, jumped sixteenfold, to $1.70 from 10 cents. Each call option gives investors the right, without the obligation, to buy 100 shares of a company at a specified price by a given date.
Trading in options to buy shares of Milwaukee-based Harley-Davidson also jumped to a record on speculation that the nation's biggest motorcycle-maker might be acquired by the world's biggest, Honda Motor Co.
A combined firm would command as much as 60 percent of the U.S. motorcycle market, said Tim Conder, an analyst with A.G. Edwards & Sons in St. Louis.
The number of call options traded jumped to 49,848. Volume hadn't exceeded 25,000 contracts since October 2005. The most active call, which gives investors the right to purchase Harley-Davidson shares at $70 by July 21, rose sevenfold in price, to 35 cents.
"There are rumors of a potential takeover," said Frederic Ruffy, an options analyst at Redwood City, Calif.-based Optionetics.com. "Investors think it's credible. They expect an announcement in the short term and a big move in the stock."
Shares of Harley-Davidson increased the most since October, adding $2.43, or 4 percent, to $62.55, on the NYSE after touching $63.99 earlier in the session.
Conder called the speculation "false" because an offer from Honda might not survive Federal Trade Commission scrutiny and a merger might "alienate U.S. customers."
Bob Klein, a spokesman for Harley-Davidson, declined to comment. A Honda spokesman didn't return a call.
Traders "are looking to get as much leverage as possible" by buying contracts that expire next month at a strike price that's more than $7 higher than Harley-Davidson's share price, Ruffy said.
"That's a sign they expect something soon because it would take a major announcement to push the stock up to $70," he said.
posted by Carlos T Mock @ 11:10 AM
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