KKR Bids $50 Per Share for Jim Walter : Traders Expecting Higher Offer Push Stock to $58

Stock in Jim Walter Corp. soared Thursday after the diversified company said it would consider a $50-a-share cash buyout offer from the New York investment partnership Kohlberg Kravis Roberts & Co.

After a delayed opening, Jim Walter shares jumped $12.50 to $58 in heavy New York Stock Exchange trading, topping the KKR offer and indicating that investors were speculating that a higher bid might emerge.

Jim Walter is a diversified building materials and natural resources company that operates primarily in the South and Southwest. It also is one of the nation’s largest home builders, specializing in inexpensive, partially finished “shell” homes.

The company has about 40.5 million common shares outstanding, giving the KKR offer an indicated value of nearly $2.03 billion.

Offer ‘Friendly’

David Townsend, a Jim Walter spokesman, said the company’s board would appoint an investment adviser and review the offer.

Although Townsend initially characterized the offer as unsolicited and unexpected, a Kohlberg Kravis spokesman said the Jim Walter board had been in contact with the partnership beforehand.

“It’s a friendly offer,” said Thomas Daly, an outside spokesman for KKR with Kekst & Co. “The board of directors was aware that KKR was making this offer.”

KKR is a leader in leveraged buyouts, in which investors borrow heavily to buy out a company and then pay off the debt with the target company’s cash flow or the sale of its assets.

As with past KKR deals, members of Jim Walter management will be invited to participate in the buyout but their involvement is not a condition of the deal. The offer also was conditioned on completion of a negotiated definitive merger agreement.

Townsend said he believed KKR’s interest stemmed from the company’s streamlining over the past several years.