Tambrands’ Stock Soars on Sale Speculation

Shares of Tambrands Inc. soared Monday after a newspaper report said the financially troubled maker of personal products is looking for a buyer.

The Wall Street Journal said Johnson & Johnson, the health care products giant, may be interested in acquiring the maker of Tampax tampons and other feminine hygiene products. Tambrands has a market value of $1.6 billion.

Tambrands’ shares climbed $6.125 to close at $46.25 on the unconfirmed report, while Johnson & Johnson’s stock slipped 37.5 cents to $42.50 on the New York Stock Exchange.

Tambrands officials in White Plains, N.Y., were not available for comment, and J & J officials in New Brunswick, N.J., declined to comment.

Buyout specialists could not place a specific buyout value on Tambrands’ shares, but one said a buyer could be found in the $50-a-share range.

“It’s a very doable number, especially in this (low) interest rate environment,” said a Wall Street arbitrager.

At $50 per share, Tambrands would be worth about $2 billion.

But Wall Street traders said investors apparently viewed Tambrands’ market value as too high, and they sold the shares of J & J.

“It seems to me that $1.6 billion is an awful lot for a one-product company,” a trader said.

A sale of Tambrands, which is searching for a new chief executive after Martin Emmett resigned under pressure as chief executive officer earlier this month, would be viewed positively by its investors, analysts said.

Emmett left amid disclosures that the company’s earnings would fall short of analysts’ expectations.

The company’s shares tumbled to a 52-week low of $39.50 following Emmett’s resignation, having previously fallen from a high of $65 in the last six months.

“The concept of selling it to a larger company that has a whole array of similar products makes sense to me,” one analyst said. “Tambrands is obviously having trouble.”

The company recently said its second-quarter earnings would be “significantly below” those of a year ago and that 1993 profit will also be down from 1992. It cited competitive pressures, among other things.

A sale of Tambrands to a buyer such as Johnson & Johnson would make sense because J & J already makes feminine sanitary napkins, analysts said.

“It fits their image,” one expert said. “It’s a related product, No. 1 in its field, and J & J likes to be the leader in their product lines.”