Heard on the Street
With Slide in Enron's Stock, Firm May Be Takeover Target
By JOHN R. EMSHWILLER and REBECCA SMITH
Staff Reporters of THE WALL STREET JOURNAL
With growing revenue, a dominant position in major energy-trading markets and a depressed stock price, Enron Corp. would logically be prime takeover bait. But in the topsy-turvy world of Enron, what constitutes logic anymore?
Takeover speculation has swirled around Wall Street and the energy markets in recent days as Enron shares have plummeted by about two-thirds to their lowest level in a decade, a selloff sparked by a loss of investor confidence in the Houston energy-trading company following big third-quarter write-downs and the disclosure of a Securities and Exchange Commission inquiry into transactions involving its former chief financial officer. Among the names bandied about as potential buyers of all or at least a substantial chunk of Enron are General Electric's GE Capital unit, Warren Buffett's Berkshire Hathaway and Royal Dutch/Shell. GE and Berkshire had no comment. A spokesman for Shell couldn't be reached.
Meanwhile, Enron has approached at least one major institutional investor, seeking a capital infusion, according to a person familiar with the matter. But Enron was turned down because of uncertainties over its financial condition, this person says.
While Enron shares, which are trading at about book value, look cheap by historical standards and even compared with two weeks ago, it isn't clear whether history is much guide when evaluating Enron these days, say analysts and others. Even fans of the stock have long complained about difficulty understanding how Enron operates because of its enormously complex financial structure and relatively sparse disclosure. For years while Enron's stock price was soaring, much of Wall Street didn't seem to care about such issues. |
