Borg-Warner and Kuhlman - Why Speculation of That Deal Didn't Make it Intothis Column.Analyst, company believed a deal was unlikely.

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From the "kicking myself" department: There's nothing dicier, for a biz journalist, than reporting on takeover speculation. Short of having an killer source, it's the easiest way to look like a chump (or for an investor, acting on the rumor, to lose a bundle). Even deals that are in talks can and do fall apart at the last minute.

Keeping that in mind: Eearlier this week I heard about the possibility that Borg-Warner would buy Kuhlman. The info came from a very reliable Wall Street source, and that source's source (I always like to know) was impeccable. As you can see by Kuhlman's stock, which is up about more than 5 points on the week, lots of other folks heard the same story.

However, in checking with one analyst, who wanted to remain anonymous, the feeling was that such a deal was possible, but not probable. The reason: price. The rumored price of $39, according to this analyst, was well below the company's high of 51 earlier this year. And while the rumored inclusion of $150 million in Borg-Warner stock would have put the deal's value at or near that number, it was well below what many analysts had as a longterm target on the stock. One reason was that that Kuhlman CEO Robert Jepson had made it clear to Wall Street that he believed Kulhman had a bright future on its own, and that he believed stock price as an independent company could have a "1" in front of it. (And he wasn't talking about the teens.)

I also asked a Kulhman spokeswoman about the prospects of a Borg Warner deal. A spokeswoman said she hadn't heard about it, so her belief was that nothing was in the works. Usually companies don't comment; however, I realized she was unsophisticated dealing with the press and probably was kept out of the loop.

This is one case where being safe made me sorry.