Sunday, August 05, 2007

Hit #178 (Playtex)

Playtex (PYX) is being bought by Energizer for $1.2 billion in a cash deal. The $18.3/share offer makes for a 77.8% profit over my average cost of $10.29.

I had mentioned Playtex as a buyout candidate when J. Jill was rumored to be a target. The only thing surprising was that Playtex, mostly known for tampons, is being bought by a company that is primarily known for batteries. While I like the premium I am getting here, this combine doesn't seem to be a natural fit at all!

There was atleast one public indicator that a takeover was coming when the CFO canceled an appearance at a conference, supposedly due to a scheduling conflict. As detailed in the WSJ report, quite a few traders may have walked away with big profits. This indicator isn't anywhere near being as interesting as the MBNA/copter crash incident.

Warner Chilcott (WCRX), which makes women's healthcare/dermatology products, could be another target, for the likes of Johnson & Johnson. The stock, in spite of the debt, looks relatively cheap.

Like with Cytyc mentioned earlier, Playtex falls into a category that is uncomfortable for many investors to talk about, let alone invest in. And for that very reason, I have fun bringing it up every time somebody touts Google or Apple. The reaction varies from person to person, but it is always memorable!

Spectrum Brands (SPC), a company similar in profile to Energizer, but in very bad shape right now, is a good speculative bet for the brave!

Previous hit - Opsware (#177)


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