Commercial Metals Up on Takeout Rumor
Scott Eden
02/22/10 - 04:30 PM EST
(Updated to include commentary from Commercial Metals' CFO and for closing stock prices.)
NEW YORK (TheStreet) -- Shares of Commercial Metals(CMC Quote) shot higher by as much as 14% Monday on speculation of a possible takeout.
The rumor, cited by Briefing.com and later on CNBC, tagged two names as potential acquirers: the once-acquisitive mini-mill giant Nucor(NUE Quote) and Gerdau Ameristeel(GNA Quote), a mini-mill steel producer controlled by Brazil's Gerdau SA.
Bill Larson, Commercial Metal's chief financial officer, told TheStreet that Monday's deal chatter may have been sparked after he canceled a trip to an industry investor conference, hosted by Morgan Stanley(MS Quote) in New York, where he was scheduled to speak this Friday.
But, he said, the cancellation was due to an unforeseen personal conflict, about which he wouldn't be more specific. "People have asked why I'm not going to be there," he said. "I'm honored that I'll be missed."
When asked if he could put the rumors to bed by denying them outright, he cited the standard corporate policy of not commenting on market speculation.
One analyst who covers the metals industry said the odds were long that any truth lay in the rumors, though he wouldn't rule anything out.
He based his skepticism on Commercial Metals' core business: producing steel products (rebar, load-bearing beams) used in commercial construction -- just about the most downtrodden steel end-market there is. (The analyst wished to remain anonymous because he hadn't been authorized to speak with the press.)
This isn't the first time that Commercial Metals, based in Irving, Texas, has been the subject of takeover rumors. Last year, market scuttlebutt singled out ArcerlorMittal(MT Quote) as a potential buyer.
Commercial Metals shares ended a frenetic trading session Monday at $16.43, up $1.34, or 8.9%. Volume reached 11.2 million shares, more than six times the stock's daily average turnover over the last three months.
Last year, like many steel names, the company's shares rallied hard off their March lows. The stock touched a 52-week high of $21.29 in late September after falling as far as $8.83 during the worst of the bear market.
"Life is a field of unlimited possibilities."
