BUSINESSWEEK ONLINE : NOVEMBER 13, 2000 ISSUE
BUSINESSWEEK INVESTOR -- INSIDE WALL STREET Midas Is Muffled--and May Draw Bids Midas ( MDS) has yet to bestow the golden touch on its stock, which has skidded from 26 in June to 13 13/16 on Nov. 1. Part of the reason: earnings disappointment, due to a delay in rolling out a program to transform the muffler chain into a national full-service one-stop auto-repair enterprise. The stock's drop has raised the possibility of Midas attracting a buyout. ''Management has become nervous about the sharp drop, because it makes Midas vulnerable to a takeover,'' says value investor Mark Boyar, who scouts for companies selling well below their intrinsic value. He thinks Midas, which controls 2,700 franchised shops in 18 countries, is way undervalued, with a p-e ratio of 7, based on 2001's estimated earnings of $1.75 a share. Midas has repurchased 2.8 million shares since 1999 and plans to buy a further 2.2 million. Midas owns or leases nearly all of its locations and collects rent and fees from franchisees. Midas also sells its own branded products. ''Midas has in place a recurring income stream,'' notes Boyar. Fiat paid Midas $100 million in 1999 for the right to use the Midas brand in Europe, he says, and Ford has acquired repair shops there. Boyar thinks Fiat, Ford, or a large auto-parts maker could seize on the stock's depressed price and make a move. In a buyout, he says, Midas is worth 30 a share, or $450 million--more than twice its current market cap of $212 million. That is cheap, since it would cost $1 billion to replicate what Midas has, says Boyar. By GENE G. MARCIAL _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Midas Is Muffled--and May Draw Bids CHART: The Engine Sputters INTERACT E-Mail to Business Week Online

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