FYI.... rumor is true...but only early speculation.
Reuters Report:
Rossignol shares surge after Quiksilver approach
Mon Jan 3, 2005 07:12 AM ET
(Adds analyst comments, background, updates shares)
By Caroline Jacobs
PARIS, Jan 3 (Reuters) - Skis Rossignol (SKIR.PA: Quote, Profile, Research) shares surged on Monday after Quiksilver Inc. (ZQK.N: Quote, Profile, Research) , a U.S. maker of surfing-inspired clothes, approached the French sports clothing and equipment maker with a view to a takeover.
Shares in the world's leading maker of winter sports goods, which has slashed its full-year profit outlook due to the dollar's weakness, have been subject to takeover talk for some time, with some analysts valuing the stock at about 19 euros.
That would value the company at more than 235 million euros ($320 million).
On Monday, the stock rose as much as 15 percent, as analysts said other U.S. companies such as Nike Inc. (NKE.N: Quote, Profile, Research) could be interested in the French firm.
Rossignol is 'a company we are looking at more closely, even though it is not the only possibility', Bernard Mariette, Quiksilver's president, told newspaper Les Echos in an interview published on Monday.
Rossignol confirmed Quiksilver had approached it to discuss a merger but said the controlling Boix Vives family had not yet decided to sell its holding. The family owns a 45 percent stake in Rossignol and 63 percent of its voting rights.
'The Boix Vives family remains very passionate about the group and for the moment has not made a decision on selling its stake,' Yves Barnoud, the company's chief operating officer, told Reuters.
Barnoud added Rossignol had been approached several times in the past few years about a takeover.
Rossignol shares rose 10.4 percent to 17.00 euros by 1157 GMT, and earlier touched a record high of 17.70 euros.
Its supervisory board Chairman Laurent Boix Vives told Les Echos that Rossignol had not yet responded to a letter of intent from Quiksilver. For Quiksilver, buying Rossignol would enable it to develop its outdoor activities, analysts said.
If he decided to sell his stake and if the price offered was at least equal to the current stock price, Gilbert Dupont analyst Claire Deray said she would recommend shareholders to hand in their stock.
Deray has a share price target of 10.9 euros and rates the stock 'sell' as, following Rossignol's profit warning, 'there is nothing to be expected in terms of earnings in the next two to three years'.
OTHERS INTERESTED?
Analysts said other companies aside from Quiksilver might be interested in buying Skis Rossignol, which also makes golf, skating and tennis equipment, and has said it is looking for takeovers to diminish its exposure to winter sports.
One alternative suitor could be Nike, whose commercial network would strengthen the distribution of Rossignol's products and sporting goods, Fideuram Wargny analyst Virginie Blin said in a research note.
K2 Inc. (KTO.N: Quote, Profile, Research) may also be interested as it is looking to expand in Europe, she added.
'Suppose the acquirer could, thanks to synergies, achieve an operating profit of 50 million euros in 2007 and that he would be prepared to pay 10 times this forecast operating profit, the entrerprise value would be 500 million euros,' Blin said. She has a 19.60 euro share price target on the company.
Operating profit in the year ended March 31, 2004, was 24.5 million euros.
Rossignol has said the dollar's weakness against the euro and weak roller blade sales would slash about 3 million euros off its net profit, to 6 million euros.
It has said that sales, on constant exchange rates, should rise 5 percent from 478.6 million euros a year ago. (Additional reporting by Nathalie Meistermann)
