No second bids expected for Petro-Canada; Myriad stock predicted to hit $91 after spinoff

By Cristal Cody

Tupelo, Miss., March 25 - Speculation grew on a spoiler bid for Petro-Canada with the company's stock trading below Suncor Energy Inc.'s offer, which was valued at $30.73 a share on Wednesday - but an analyst told Prospect News that scenario is off the mark.

Looking ahead, an analyst predicts shares of Myriad Genetics Inc.'s diagnostics division will be valued at $91.00 apiece after the company completes a spinoff this summer.

In other action on Wednesday, Rodman & Renshaw Capital Group, Inc. said that the investment banking firm is no longer interested in acquiring Cowen Group, Inc. because of market conditions.

Also on Wednesday, Ramco-Gershenson Properties Trust said it will review strategic and financial alternatives after shareholder Equity One, Inc. showed some interest.

Looking to Wall Street, investors managed a last-minute rally that sent stocks up Wednesday.

The Dow Jones Industrial Average gained 89.84 points, or 1.17%, to close at 7,749.81.

The Standard & Poor's 500 index rose 7.63 points, or 0.95%, to 813.88, while the Nasdaq Composite index rose 12.43 points, or 0.82%, to end the session at 1,528.95.

Petro-Canada discount

Under the deal's terms, Petro-Canada's stockholders will receive 1.28 Suncor shares for each of their shares.

"The probability of another bid is pretty small," an analyst said in an interview Wednesday.

Petro-Canada's lagging stock price has more to do with the fall in the price of commodities since the deal was announced on Monday, the analyst said.

"Petro-Canada share prices are essentially linked to Suncor. If Suncor trades down, so will Petro-Canada," he said.

While the merger of oil and gas retailers Petro-Canada and Suncor, both based in Calgary, Alta., is subject to approval from shareholders and court and regulatory clearances, the deal appears solid.

"It's never a sure thing, but when you have two Canadian companies coming together, it's a better likelihood of it happening than say a foreign company was going to come in and bid for Petro-Canada," the analyst said.

Petro-Canada shares rose 2 cents, or 0.07%, to close Wednesday at $27.50, and Suncor's stock closed up 5 cents, or 0.22%, at $23.22.

Myriad spinoff

Salt Lake City-based Myriad Genetics announced in October it planned to spin off its research and drug-development businesses from its molecular diagnostics business to form independent public companies.

The molecular diagnostics business will operate under the name Myriad Genetics, Inc., and the research and drug-development businesses will operate under the name Myriad Pharmaceuticals, Inc.

Myriad Genetics approved a two-for-one stock split that became effective on Wednesday to increase the company's outstanding shares to about 95 million.

The spinoff is expected to be completed through a tax-free stock dividend transaction by June. Shareholders will receive one share of Myriad Pharmaceuticals for each share of Myriad Genetics they own.

An analyst estimates the company's value at $72.00 per share if the spinoff is not completed and a $91.00 stock value on Myriad Diagnostics after the spinoff. The pharmaceutical division is not expected to hold major value as a standalone company, an analyst said.

"The diagnostic business is likely to be in a position to start paying dividends in 2010, while the drug-development business of Myriad is likely to be loss-making and consequently unlikely to pay dividends in the near future," the analyst said. "We would view Myriad Diagnostics as a potential takeover target in the medium term for pharmas interested in the diagnostic market. Our view of Myriad Pharma is that it is a high-risk stock to hold post spinoff."

Myriad shares jumped $7.87, or 9.69%, to close Wednesday at $89.09, setting a new 52-week high over the previous trading high of $88.40.

Shares rose after the American College of Obstetricians and Gynecologists said it plans to recommend routine evaluations of patients at risk of a genetic mutation that carries a higher risk for breast or ovarian cancer. Myriad produces a genetic screening test for the mutations.

Rodman & Renshaw backs out

New York-based investment banking firm Rodman & Renshaw offered to buy rival Cowen Group for $7.00 a share in December.

Cowen, a New York-based firm, rejected the offer and said the deal had no strategic benefit and would not increase the company's value because it already offers all the products and services available at Rodman & Renshaw.

Cowen representatives did not return a call for comment on Wednesday.

Rodman & Renshaw's stock lost a penny, or 2.63%, to close at 37 cents on Wednesday. The stock has traded from 14 cents to $2.99 over the past year.

Shares of Cowen Group closed up 2 cents, or 0.36%, to $5.62. Cowen's stock has traded as low as $3.54 to as high as $10.50 over the past year.

REIT reviews alternatives

Farmington Hills, Mich.-based Ramco-Gershenson Properties Trust said Wednesday that the real estate investment trust has received indications of interest for potential transactions.

Equity One, which owns 9.6% of Ramco-Gershenson's outstanding stock, also has made requests for access to confidential information and other requests including board representation and a waiver of the ownership limits.

Ramco-Gershenson's board said it plans to take no action to the requests while it reviews alternatives. The company hired Merrill Lynch & Co. as the financial adviser to assist in the process.

"The range of alternatives which may be considered includes potential financing and restructuring transactions, assets sales and strategic transactions with third parties," Ramco-Gershenson said in a statement.

The board also has adopted a shareholder rights plan that is triggered if an investor gains 15% or more of outstanding shares. The plan expires on March 25, 2010.

Ramco-Gershenson owns interests in 89 shopping centers in Michigan, Florida, Georgia, Ohio, Wisconsin, Tennessee, Indiana, New Jersey, Virginia, South Carolina, North Carolina, Maryland and Illinois.

Shares of the REIT gained 39 cents, or 7.21%, to close at $5.80 on Wednesday, well off a 52-week high of $24.10.

Mentioned in this article:

Cowen Group, Inc. Nasdaq: COWN

Myriad Genetics Inc. Nasdaq: MYGN

Petro-Canada NYSE: PCZ

Ramco-Gershenson Properties Trust NYSE: RPT

Rodman & Renshaw Capital Group, Inc. Nasdaq: RODM

Suncor Energy Inc. NYSE: SU

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