Puma downgraded to "hold"

12.04.07 - AC Research

LONDON, April 12, (newratings.com) ? Analyst Henning Wagener of AC Research downgrades PUMA AG (PUM) from "accumulate" to "hold."

In an AC Research research note dated April 11 and published this morning, the analyst mentions that the French luxury brand company, PPR SA, plans to take over PUMA. SAPARDIS SA, an almost 100% subsidiary of PPR has concluded a contract with Mayfair Beteiligungsgesellschaft I mbH for the purchase of stock amounting to a 27.14% stake in PUMA. The price of the stake sale is ?330 per share. Now PPR wants to, however, submit a voluntary official takeover bid to all PUMA shareholders for ?330 per share, the analyst says.

PUMA?s board of directors has already expressed its support for the bid, AC Research reports. Given this backdrop, the company?s board is likely to recommend that its shareholders accept PPR?s offer. PPR is scheduled to present the bidding documents after their release by BaFin, which is expected during May, the analyst adds. According to the schedule presented by PPR, the bidding phase might then be completed by early July.

PUMA?s shares closed trading at ?343.93 on April 10, which is already higher than the proposed bidding price. Investors are therefore waiting for an increase in the bid or a possible competitive bid, AC Research states.

At ?330 and with a 2007 P/E ratio of about 17, PUMA?s stock does not seem to enjoy an ambitious rating compared to that of its peers. Meanwhile, the company is looking at some rather positive perspectives for future growth, the analyst says. AC Research believes that given this backdrop, it cannot not be excluded that other bidders would appear on the scene or that PPR would raise its takeover bid, although there are currently no distinct signs for such a scenario.

AC Research downgrades PUMA AG from "accumulate" to "hold."