Newspaper article THE JOURNAL RECORD

Speculative Fever Brews over Takeover Offers

Newspaper article THE JOURNAL RECORD

Speculative Fever Brews over Takeover Offers

Article excerpt

The giant takeover offers in recent weeks have touched off a burst of speculative fever on Wall Street.

With many stocks already rising on merger rumors, analysts are scrutinizing hundreds more to identify tomorrow's targets. And brokers are calling clients with tips to encourage more trading.

``Brokers call and say, I hear this, I hear that and you should look at this,'' said Neil J. Weisman, general partner of the ChilmarkCapital Corp., a New York money management firm that invests $60 million for wealthy individuals. ``That's all I'm hearing.''

Of course, much of the chatter that passes for research proves to be mere gossip or speculation. But the recent huge takeover offers have heightened investors' awareness of the importance of corporate financial acquirers in a market that, since the crash, has lacked any clear direction.

RJR Nabisco's management announced last week that it was considering a $17 billion leveraged buyout. Earlier, Philip Morris offered to buy Kraft for $11.5 billion and Pillsbury rejectd a $5.23 billio bid from Grand Metropolitan.

Indeed, since Labor Day, the value of the 777 announced offers, some of which represent competing bids for the same company, has totaled $81.9 billion, said I.D.D. Information Services in New York.

``It looks like a frenzy,'' said Steven A. Kroll, president of S.L.H. Asset Management, the $30 billion investment management subsidiary of Shearson Lehman Hutton Inc.

The result is a market more and more driven by the prospect of a quick killing. Investors are less concerned with a company's long-term prospects than with the possibility of it becoming a target.

``If things were short-term-oriented before, they are really short-term-oriented now,'' said Linda S. Newman, president of Atalanta Capital, a New York firm that invests $200 million for wealthy individuals.

Traders and market professionals say the heightened interest by experienced investors has not yet resulted in attracting back many of the individuals who fled the stock market after it crashed last October.

Nonetheless, the speculative fever has become so pronounced that almost every big company in America is considered a possible target. Portfolio managers say that among those mentioned last week were companies as large as Ford, Chrysler, Sears, Roebuck and J.C. Penney.

The current issue of Financial World magazine even lists the potential breakup value of the 200 largest publicly traded corporations.

As a result of all the attention that takeovers and buyouts are creating, the talk on Wall Street lately is rarely of a company's future corporate earnings or new products. Money managers on the receiving end of Wall Street's research say that analysts and investment strategists increasingly focus on what a leveraged buyout fund or other acquirer would be willing to pay. …

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