NEW YORK (TheStreet) -- Shares of Lumber Liquidators (LL) jumped on heavy volume on Friday and are higher by 3.49% to $21.36 in mid-afternoon trading, following unfounded reports that the battered hardwood flooring retailer is the target of a takeover by a large home improvement chain.
One of the founders of the hedge fund Kase Capital Management, Whitney Tilson, said he heard a rumor that Home Depot (HD) could look to buy Lumber Liquidators for $35 to $40 per share, MarketWatch reports.
Tilson, a known short seller of Lumber Liquidators, commented on the rumor:
"This is the dumbest rumor ever. Nobody is going to buy Lumber Liquidators, nor will any bank finance an acquisition or management buyout (even in this debt-markets-wide-open environment), because nobody--not me, not the company, not the lawyers suing Lumber Liquidators--has any idea what the liabilities are--but they are potentially large and open-ended,' Tilson said in a statement to MarketWatch.
Lumber Liquidators has been struggling since a March report from CBS Corp.'s (CBS) "60 Minutes" accused the company of selling customers hardwood flooring materials made in China that held a higher than legally allowed amount of the carcinogenic chemical formaldehyde.
Since the "60 Minutes" report aired the company has stood behind the safety of its products. However, Lumber Liquidators is facing an onslaught of lawsuits and the company's CEO stepped down in May.
So far today, 4.54 million shares of Lumber Liquidators have exchanged hands as compared to its average daily volume of 3.59 million shares.