Todd-AO Hires Lazard Freres to Explore Options

Todd-AO Corp., a post-production studio that worked on the movie “Titanic,” said it hired Lazard Freres & Co. to advise it on a possible sale as its shares have fallen by a third in about 13 months.

Los Angeles-based Todd-AO has won 18 Academy Awards and 21 Emmy Awards since its founding in 1952 by film producer Michael Todd. Its shares have declined since touching $13 on May 22, 1998.

New York-based Lazard, one of the biggest U.S. investment-banking partnerships, also may advise Todd-AO on a merger or joint venture. Todd-AO said its shares are undervalued as demand for its post-production services continues to be strong.

“The sizable spending requirements to maintain leadership in this field may have contributed to this situation,” said Hilliard Lyons Inc. analyst Jeffrey S. Thomison, who said the television and movie company could sell for about $165 million, or about $16 per share.

“The economics of films have not been too favorable, the costs have risen and sales have sometimes fallen below expectations,” Thomison said.

His estimate of the price Todd-AO could fetch is about nine times its fiscal 1999 cash flow and 2.8 times book value, he said. The company, with about 10.5 million shares outstanding, is about 60% owned by insiders, Thomison said.

Shares of Todd-AO rose 13 cents to close at $8.69 in Nasdaq trading.