Ransom's bullish stance stems in part from management's efforts to reduce its debt load and increase cash flow per share. But there is another factor that has helped revive the stock: Service Corp. has been getting takeover nibbles from several groups, including two leveraged-buyout outfits and two major financial-service companies, says one money manager. Service Corp., as of the end of 2000, operated 3,611 funeral parlors, 569 cemeteries, and 200 crematoriums in 18 countries on five continents.
In a buyout, the company could be worth 7 to 8, says one investment banker. He says suitors are attracted by the company's strong cash-flow growth and real estate properties. Service Corp. has been selling some properties to pay off debt. Its goal, he says, is to slash debt of $3.3 billion, to $2.5 billion or $2 billion, by the end of 2002. Ransom projects cash flow of 44 cents a share in 2001 on revenues of $2.4 billion. Service declined comment on the buyout rumor.
The Citigroup CEO may be courting American Express. Oil-patch operator Stone could be getting bids. And a fresh flowering may loom at Service Corp. By Gene G. Marcial