NY Post: Is Dillard’s the Next Public Company to Sell?

by John Henry  on Monday, May. 21, 2007 11:41 am  

In the space of a week, Acxiom Corp. and Alltel Corp. have announced buyouts, making conditions ripe for more buyout talk.
The New York Post planted a seed, saying in an article in Monday’s issue that a recent runup in share price for Dillard’s Inc. of Little Rock stock is sparking talk that the department store chain may be looking at “strategic alternatives for the company.”
The article by Suzanne Kapner said analysts have seen Dillard’s as a takeover target for a long time, but the family that founded the company “has shown little interest in selling.”
“More likely is that the Dillard family is considering taking the company private or wringing money out of its sizable real estate portfolio through a sale and lease back,” the Post article said.
Citing unnamed sources, the article said “Dillard's has put out tentative feelers to bankers in recent weeks to discuss strategic possibilities, but they cautioned that the talks were preliminary in nature and no deal was imminent.”
Dillard's CEO William Dillard II is familiar with "strategic possibilities." Dillard was on was on the Acxiom Corp. buyout committee that brokered the Little Rock data services firm's sale to two other private equity groups last week.
What makes Dillard's a prime target is its real estate holdings. It owns 241 of its 328 stores as well as six of its eight distribution centers. “Private equity firms, which are flush with cash, have snapped up retailers in recent years in large part for their real estate value,” the Post article said.
Dillard’s stock (NYSE: DDS) hit a 52-week high last Friday, closing up more than 7 percent at $38.10, boosted, in part by the strong earnings reports of several department chains, such as J.C. Penney, Kohl’s and Nordstrom, all of which reported first-quarter profit above Wall Street's expectations.
Shares of Dillard's were trading at $40 by noon Monday after closing at $38.10 on Friday.
In its annual report released last month, Dillard’s posted net income of $245.6 million on revenue of $7.6 billion.

 

 

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