Whirlpool Corporation (NYSE: WHR) is a name which has been thrown around buyout circles before. While the company has remained independent, there appear to be fresh buyout rumors driving interest in options today. We took a 1:00 PM EST snapshot and the call options are showing significant upside in trading volume as rumors appear to be back.
We took a look at the December and January call option trading and it is very elevated:
| DATE | VOLUME | OP-INT |
|---|---|---|
| DEC-CALL | Volume | Open Int. |
| $80.00 | 1,228 | 5,561 |
| $85.00 | 713 | 4,699 |
| $90.00 | 4449 | 3,545 |
| $95.00 | 877 | 1,493 |
| JAN-CALL | Volume | Open Int. |
| $80.00 | 2,557 | 4,784 |
| $85.00 | 2,601 | 5,715 |
| $90.00 | 4337 | 3,137 |
| $95.00 | 1,330 | 1,564 |
| $100.00 | 962 | 1,487 |
| $105.00 | 111 | 1,285 |
The stock is up 3.7% at $88.81 on 1.9 million shares as of 1:09 PM EST and the average volume is 2.07 million shares and the 52-week trading range is $71.00 to $118.44.
Barron’s recently noted that Whirlpool share prices could reach back above $100 again if it can meet its sales targets. That was over a week ago now, but things may be heading the way of that call.
See the chart from stockcharts.com below. It appears that Whirlpool is at a critical juncture on that chart as shares are challenging the 200-day moving average.
The market cap may be too high still a $6.75 billion for a leveraged buyout from private equity. At $88.81, Whirlpool trades at implied forward multiples of 9.15-times 2010 earnings expectations and at about 10-times 2011 earnings expectations using Thomson Reuters consensus data. Its most recent balance sheet data from September 30 shows an equity value of about $4.03 billion. Unfortunately, its tangible book value after backing out goodwill and intangible assets was only $495 million.
Stay tuned. As with all rumors, they should be treated with some degree of skepticism until a press release confirms them.
JON C. OGG
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