CHICAGO, Ill. — Volatile trading of Navistar International’s stock–as well as the recent decision to vote at its annual meeting on whether it should keep its “poison pill” –has renewed speculation that it may be a takeover target.
Navistar’s shares were up US$1.17 to close at US$29.18 Friday on the New York Stock Exchange.
“The stock has always been rumored to be a possible takeover candidate and those rumors are continuing,” an options trader on the Chicago Board Options Exchange told Reuters. “People are using the options and buying calls to try to play that.”
Navistar didn’t comment on the increased trading.
A call option is an agreement with a company that gives an investor the right to buy a certain number of its shares at a guaranteed price, usually before a specified date.
“I don’t know what is going on,” said options specialist George Roeser with J. Streicher & Co. on the American Stock Exchange. “There has been a rumor of a cash deal for awhile. It is the most options activity I have seen in Navistar on one line.”
About 4,876 calls, as well as unusually high stock trading, took place at the end of last week.
The decision to vote on the “poison pill,” which helps a company fight off an unwanted or undervalued takeover offer, was put on the agenda of Navistar’s annual meeting by Gabelli Asset Management, the company’s second largest shareholder.
The meeting is scheduled for Feb. 20.