Looking for a way to boost its disappointing stock price, Metromail got it Feb. 11 as its stock soared $8 7/16 to a 52-week high of $26 3/16 after an announcement that the company was the target of takeover interest.
Metromail (NYSE: ML) was the second biggest percentage gainer of the day with a share increase of 47 percent. Barton Faber, chairman, CEO and president, said Feb. 10 that Lehman Brothers had been retained to manage and formalize “unsolicited indications of interest to acquire or merge” with the company.
Sources at Metromail, Lombard, IL, expect to compile a short list of buyers by March and have a tender offer by April. The database and direct marketing giant suffered an earnings loss of 24 cents per share in the fourth quarter, far below the 50 cents per share in net income analysts were expecting, according to Chicago-based Zacks Investment Research.
While the company is doing better than the numbers suggest, as evidenced by revenue and cash flow growth, Faber acknowledged that its stock has been lagging. Wall Street sources estimate Metromail should be trading in the $30 to $40 range. Metromail executives seem convinced that a merger or acquisition is the best way to boost share price.
Faber said that such offers had come “at substantial premiums to the current market price” and that any action would be motivated “to maximize shareholder value.”
