| BUSINESSWEEK ONLINE : MAY 31, 1999 ISSUE | ||||||||
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| BUSINESSWEEK INVESTOR -- INSIDE WALL STREET
AGCO's Time to Reap? It has been a dry season in farm implements. Demand has slowed due to soft commodity prices and the drop in crop exports to Asia. Shares of AGCO AG, a maker of agricultural equipment, have languished between 6 and 8 for much of 1999. But in April they started pushing up, closing at 10 1/4 on May 18. One reason: On May 17, New Holland agreed to acquire Case, another big name among farmers, for $4.3 billion. The deal awakened investors to other possible targets in the struggling industry. AGCO, say some analysts and money pros, could be the next buyout bait. One New York investment banker says that AGCO has become an attractive target, with its price trading well below book value of $18 a share. This pro says that in view of the hefty price that New Holland is paying for Case, AGCO is a bargain: ''A foreign conglomerate is seriously considering making an offer of 24 a share,'' he says. The suitor is a well-known company in Europe engaged in the automotive, transportation, agriculture, and construction businesses. AGCO's products, distributed in the U.S., Europe, South America, and the Far East, include tractors and combines sold under the names Massey Ferguson and Hesston. AGCO's stock was as high as 27 a year ago. ''The depressed stock, down more than 57% so far this year, has become much more vulnerable to a takeover,'' says the investment pro. AGCO Chairman and CEO Robert Ratliff says he hasn't received any offers. ''We will be aggressive in becoming a solid alternative to our big competitors,'' he says--and continue to pursue acquisitions. Analyst Tobias Levkovich of Salomon Smith Barney, who has raised his rating on AGCO to a buy based on improving fundamentals, believes that in light of the New Holland-Case deal, AGCO may have to find a partner. ''But it could also be viewed as takeover candidate,'' he says. Based in part on stronger-than-expected European and Brazilian farm-tractor sales, Levkovich increased his earnings estimate for 1999 from 71 cents a share to 80 cents, and his 2000 estimate from 85 cents a share to $1.10. BY GENE G. MARCIAL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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