Sunday January 10, 3:48 pm Eastern Time
Duane seen as merger target with no premium-report
NEW YORK, Jan 10 (Reuters) - Drugstore chain Duane Reade Inc. (NYSE:DRD - news) could eventually become a target of a possible takeover bid, but it would not likely go for a premium, according to a column in the latest issue of the weekly business tabloid, Barron's.
''Duane Reade is being hailed as a great turnaround story and likely buyout target,'' read the column, entitled ''Up & Down Wall Street'' and written by Alan Abelson and Rhonda Brammer.
''And while we'd never say never to the possibility of a takeover -- consolidation is rampant in the industry -- it's far from a sure thing that the company would go out at a premium valuation,'' it said.
The column said Duane had been reporting encouraging results in the last two quarters, but its balance sheet was still ''pretty dreadful''.
The chain's officials could not be reached for comment on Sunday.
The column said the chain would likely sell at half its listed price.
''Its balance sheet...is pretty dreadful,'' it said. "At the end of the third quarter, equity amounted to a miniscule $12.5 million, or 75 cents a share, compared with over $300 million, or $18 a share in debt. Worse still, tangible book is a negative $7 a share.
''So, again, while somebody may well buy the chain -- it's not all that clear that somebody will pay up for it,'' the column added.
It said Duane Reade had managed to report two profitable quarters after years of losses, an encouraging sign.
On Oct. 20, the chain reported net income of $0.31 per diluted share for the third quarter, against a net loss of $0.18 for the same period a year ago.
On Jan. 8, its stock closed 1-1/16 lower at 33-13/16 on the New York Stock Exchange, down from a recent high of 38-8/16 on Dec. 31
|
