By James Langton
(May 8 – 16:50 ET) – With a deal apparently around the corner, Trimark Financial Corp. has become one of the priciest plays on the street.
This morning, Amvescap PLC, parent of AIM Funds Management Inc., confirmed that it is talking to Trimark. Trimark has reiterated that it is talking to various suitors. Merrill Lynch notes that Trimark has delayed its quarterly earnings announcement “until further notice”. It was expected to announce last week. All of this signals an imminent deal.
All this speculation has pushed the stock up about 46% this year so far. Merrill’s favourite valuation measure, enterprise value/core equalized EBITDA, places Trimark as the priciest stock in the asset management group. Investors Group Inc. remains Merrill’s top pick. Despite strong gains in the stock last week, Merrill believes it is still the best fundamental pick.
Merrill also speculates that the merger activity may continue after Trimark finally falls. Industry sales concentrate in a handful of firms. Merrill’s informal poll indicates that industry net sales slipped 14% from April 1999 to April 2000, with a few firms capturing all the sales.