Bidding war possible over Moon-based Michael Baker, analysts say
Traders are convinced Michael Baker Corp. will receive a higher takeover offer.
Moon-based Michael Baker has closed above last month's $24.25-a-share bid from DC Capital Partners LLC every day since Dec. 27. The provider of engineering services ousted its chief executive officer in December and this month said it would consider strategic alternatives and named a new chairman.
Shares closed on Friday at $25.47, up 12 cents.
The company, down 52 percent in value since peaking in 2007, would be worth more in the hands of an acquirer, which may end up paying at least $30 a share, Crescendo Partners and D.A. Davidson & Co. have said.
“It's a company with a great reputation in the industry, and the company is very undervalued,” said Arnaud Ajdler, a New York-based senior managing director at Crescendo Partners, which owns shares of Michael Baker and wrote a letter in December to the company's board supporting a sale.
Michael Baker spokesman David Higie declined to comment on a takeover.
The company this month named a committee of independent board members to review “strategic alternatives,” including the $24.25-a-share cash offer.
“People think it's worth more, just based on the trading,” said Bill Popper, a Jersey City, N.J.-based managing director and arbitrage trader at ICAP Plc.
Potential bidders for Michael Baker include Fluor, Jacobs Engineering, Aecom Technology Corp., URS Corp. and Stantec Inc., said Tahira Afzal, a New York-based analyst for KeyCorp.
“It's a very good business model, and under the right hands and as part of a larger company, there is more value that can be extracted,” Afzal said.
Keith Stephens, a spokesman for Fluor; Aecom's Paul Gennaro; and Pamela Blum, a representative of URS at Sard Verbinnen & Co., declined to comment on whether their companies are potential buyers.
Jacobs Engineering and Stantec officials did not respond to requests for comment.
Founded in 1940, Michael Baker provides engineering services to clients including the federal government. It employs 3,000 people in 100 offices nationwide, including 725 in Western Pennsylvania.
After the shares closed at $19.11 on Dec. 13, down from a 2007 peak of $52.79, the company said its board asked CEO Bradley L. Mallory to resign. Less than a week later, DC Capital proposed merging Michael Baker with KS International LLC, a provider of engineering services to the U.S. government that's controlled by the private-equity firm.
On Dec. 26, Crescendo Partners endorsed a takeover, rather than a merger, saying in a letter that “we believe numerous parties would be interested” and that a strategic buyer would probably pay a “significant premium” for Michael Baker. Crescendo estimated Michael Baker could get more than $30 a share through a sale.
Bloomberg News contributed to this report.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Faulty air bags in 30M vehicles
- Mini goes mainstream
- Motoring Q&A: ‘Check engine’ light doesn’t reset itself
- Bond mutual funds continue to carry their weight
- Toyota Yaris adds French flair for ’15
- Sell-off reins in complacency
- Amazon investors’ patience wears thin
- First Niagara sets aside $45 million
- Stocks rise broadly on earnings; Amazon sinks
- Calgon Carbon poised for explosive growth
- EQT Corp. boosts profits despite lower gas prices