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Friday April 01, 02:41
J.C. Penney’s takeover rumors cause shares zoom
(by Natali Novak)
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Recent rumors about J.C. Penney Co. Inc.’s potential takeover forced its shares to zoom and bonds fall on Thursday, even as the retailer indicated this information to be groundless. However, J.C. Penney’s officials declined to give more detailed comments. They hinted only that all the strategies to increase its "leadership position in the retail industry" and deliver value to its shareholders will be presented at a meeting with analysts next month.
But many experts mull on the possibility of a leveraged buyout as it could improve the company’s debt burden and its share price.
J.C. Penney’s shares surged 8 %, the company’s bonds stumbled by up to 18 cents on the dollar, and the cost of protecting the company’s debt against default surged by 240 %.
In a leveraged buyout, private equity firms purchase a company that is undervalued by the equity markets and sell off the company or its assets at a profit. This case is not very applicable for J.C. Penney as it does not seem to have hidden value, analysts said.
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