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May 17, 2005

Takeover Bait

Karyn McCormack

Takeovers are definately hot. Today, Vermont Teddy Bear announced it will be taken private by an investment group led by The Mustang Group LLC for $6.50 per share. That's a nice return if you were one of the lucky ones that bought the stock yesterday when it closed at $5.25.

This week's issue of BusinessWeek gives a list of 15 potential takeover targets based on number crunching by Richard Sloan, professor of accounting and finance at the University of Michigan's Stephen M. Ross School of Business. On our website, you can find an even larger list, plus tidbits on some of the takeover candidates that came up in the screen.

Over the years, I've heard many analysts say that you should not buy a stock based on takeover potential alone. After all, you could get stuck holding a dog if a deal doesn't pan out. Then again, if you buy a stock with strong fundamentals and it happens to get bought for a premium, that's a treat.

03:02 PM


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