T. Rowe Price Associates Inc. stock jumped 5.3 percent, or $1.875 a share, yesterday on a report that a large, unidentified New York bank could offer $80 a share for the Baltimore mutual fund company.
The report in Business Week's Dec. 9 issue fueled a surge in Price's stock, which traded on heavier than normal volume and closed at $37.125, on a day when the stock market fell.
The bellwether Dow Jones industrial average lost 55.16 points to close at 6,381.94.
Officials at Price discounted the magazine's report.
"We have had no offers and no discussions of any kind with
anyone regarding a merger," said George A. Roche, Price's chief financial officer. "Other than that, it is really our normal policy that we don't comment on market rumors."
Roche said Price has "made it very clear that we have no interest in merging with people. We want to remain independent," he said.
Business Week's 'Inside Wall Street' column, citing an unnamed money manager, said the bank had already offered $60 a share in informal talks and could go as high as $80.
Analysts declined to speculate on whether a deal was in the works, but they said Price would make a great catch.
The company is the nation's 11th largest mutual-fund manager with 2 percent of the industry's $3.3 trillion in assets, and the third largest full-service 401(k)-fund manager, which is an exploding business. The company employs about 2,000 workers.
"This would be a stellar property," said Bruce Brewington, an equity analyst with Putnam Lovell & Thornton, a San Francisco-based investment banking firm. "It is a source of stable and recurring revenues and T. Rowe has very stable inflows from the retirement market."
Brewington said it would be difficult to launch a hostile bid for Price because officers and directors hold 21 percent of the firm.
"Management would have to be interested in the acquisition," he said.
An offer of $60 a share works out to about $3.7 billion for the company, or about 20 times pre-tax income over the last 12 months, said Carol Festa, an analyst with Smith Barney. "You are talking about someone with some pretty deep pockets to come up with that price," she said.
Pub Date: 12/07/96