| BUSINESSWEEK ONLINE : JUNE 28, 1999 ISSUE | ||||||||
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| BUSINESSWEEK INVESTOR -- INSIDE WALL STREET
Buyout Rumblings at Rural/Metro Rural/Metro (RURL) was once a hot-growth stock, trading last year at 36 a share, on a p-e of 40. But a one-time write-down of receivables interrupted its earnings growth, and the stock collapsed to 6 in September. The stock has since edged up to 8 3/8. A provider of ambulance, fire-protection, and 911 emergency services, Rural/Metro has drawn attention of late. The reason: Some pros see signs of a brewing management-led buyout. Some insiders have scooped up shares. One of them was board member Robert Ramsey, who bought 439,000 shares last November at prices ranging from 10 1/4 to 12 1/4, thus raising his stake to 6.7%. Mike Kicera, president of MRK Capital Management, says a management group appears to be moving toward taking the company private. Some investors specializing in LBOs have also expressed an interest in Rural/Metro, says Kicera. At its currently flattened p-e of 6.9, based on estimated earnings of $1.15 a share for fiscal 1999 (ending June 30), the stock is definitely cheap, says Kicera. He figures that in a deal, Rural/Metro shares are worth 18. (Kicera identified California biotech company Sugen, then trading at 11, as a target in this column [BW--Sept. 21]. On June 15, Pharmacia & Upjohn announced that it has agreed to acquire Sugen at 31 a share.) Analyst Tim Dwyer of A.G. Edwards, who has an ''accumulate/speculative'' rating on Rural/Metro, says management is aware of its vulnerability to a buyout. A Rural/Metro spokeswoman declined comment as a matter of policy. BY GENE G. MARCIAL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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