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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Glenn who wrote (5655)	1/6/1999 4:27:00 PM
From: Devil's Advocate	Read Replies (2) \| Respond to of 90042

From MRL thread: Likely OS takeovers from Individual Investor report.. "Pool Energy: Reluctant Bride Dragged to the Altar Analyst: Will Frankenhoff The merger mania which has seized the oil industry over the past several months continued on its merry way with Monday's (Jan. 4) announcement that Pool Energy Services (NASDAQ: PESC) was in merger talks with Nabors Industries (NYSE: NBR), the largest U.S. driller of land-based oil and natural gas wells. On the surface the news isn't surprising. The long slump in the price of oil (still hovering near 12-year lows) has contributed to a wave of consolidation ranging from Exxon's (NYSE: XON) recent acquisition of Mobil (NYSE: MOB) to Schlumberger's (NYSE: SLB) takeover of Camco (NYSE: CAM). Companies are scrambling to boost profitability through cost-cutting and economies of scale. Do You Accept this Company in Good Times and Bad? What is shocking and perhaps a harbinger of things to come, is the that Pool is clearly a reluctant bride. Not only did management reject Nabors' initial offer of $444 million in cash and stock in October but as recently as December 30, was asking the company's shareholders to vote against the "Sale of Pool" resolution forced by Nabors. This abrupt about-face by management comes a little more than a week before the resolution was to be voted on and it's clear that Pool's management is far from certain about the outcome. The company is obviously looking to improve on the $12.20 per share offer that it had initially said was tantamount to a "fire sale". Pool stock was recently trading at $12.75. Whatever the case may be, it's certain that Pool's days as an independent company are numbered, and it's likely that many more players in both the integrated and service sectors will be snapped up. Investors obviously think so too. News of the talks pushed Pool's stock up as much as $2.44, or 23%, to $13.25. Simply put, investors are betting that the low valuations and depressed stock prices sported by most energy companies make many of the smaller players vulnerable to takeovers, hostile or otherwise, especially since shareholders are looking for any sign of the proverbial "light at the end of the tunnel". This mentality seems to have played a part in Pool's situation, forcing management into talks about a sales price per share in the mid-teens when the company's shares had traded as high as $28.31 earlier in the year. Other Possible Targets Look for this trend to continue with likely targets being such small/mid-cap companies as Marine Drilling (NYSE: MRL), Trico Marine (NASDAQ: TMAR), and Global Marine (NYSE: GLM). A few of the integrated oils that look like attractive in this situation include Texaco (NYSE: TX) and Burlington Resources (NYSE: BR)."