Traders Bidding Up Carter-Wallace Are Myopic

By Avi Stieglitz
Staff Reporter

The stock of Carter-Wallace (CAR), the manufacturer of Trojan condoms and personal hygiene products, shot up Wednesday amid renewed takeover speculation.

The chatter stems from Procter & Gamble's (PG) plan to acquire Tambrands (TMB) for $1.85 billion. While Carter-Wallace's stock was a top-gainer on the New York Stock Exchange Wednesday, rising 1 1/4, or 9.6%, to 14 1/4, those who follow the company couldn't see the logic.

"It was myopic traders thinking that P&G might buy Carter-Wallace," says Rick Berry of Murphy Marseilles Smith in Atlanta. Murphy Marseilles has not done any underwriting work for Carter-Wallace.

Berry says that after Carter-Wallace rejected a sweetened buyout offer of $20 per share by Marvin Davis' company, Davis Cos., last December, it's highly unlikely that things would be different now.

"I don't see a white knight coming in," Berry adds. "There has been plenty of time for that to happen since the last offer." He expects the stock to trade within the 13 to 14 1/2 range for the near future.

Marvin Davis could not be reached for comment, but a company spokesman said that Davis Cos. had no comment on anything surrounding the Carter-Wallace offer.

Carter-Wallace spokesman Steve Curtis says the company has no comment on the stock move or on rumors that it might be bought. He added that company policy is to not discuss anything relating to the company other than what is in the public record. Unlike most publicly traded companies, Carter-Wallace doesn't give analysts any guidance on revenue or earnings per share.

The Davis offer was referred by the board to CPI Development Holding, which holds 34.6% of Carter-Wallace's class A stock and 94.5% of its voting class B stock. They said no thanks to an initial offer of $18 by Davis in early November and did the same when he upped the offer to $20 in early December. They gave no reason for their decision.

CPI's board is composed of three individuals: Henry H. Hoyt Jr., the chairman of Carter-Wallace, his sister, Suzanne Garcia, and Dr. Richard Cruess, a board member of Carter-Wallace.

Meanwhile, Carter-Wallace's board is also controlled by insiders, with five of eight members serving as officers within the company.

Carter-Wallace stock was down 1/4 to 14 on Thursday.

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