Harley-Davidson Shares Up On News About A Leveraged Buyout Of The Company

March 16, 2010 – (Motor Sports Newswire) – Shares of Harley-Davidson, Inc. (NYSE: HOG) finished 6.98% higher at $28.35 on Tuesday as news about a possible takeover of the company surfaced. The shares reached a high of $28.98 in trading. Harley-Davidson, however, declined to make any comment on the news.

Options on Harley-Davidson shares also saw a lot of activity. According to Fredric Ruffy, option strategist at WhatsTrading.com, traders were focusing on March call options, which had strike price between $25 and $28, and April call options, which had strike price between $28 and $30.

The news about a leveraged buyout of Harley surfaced early on Tuesday; with speculation among traders that private equity firm Kohlberg Kravis Roberts could bid for the company.

Peter Zuger, fund manager at Touchstone Mid Cap Value Fund, was circumspect about a possible takeover of the company and took advantage of the surge in Harley shares to offload his holdings in the company. “There’s been a rumor a day among a lot of value names for the last week. I don’t know which ones are real and which ones aren’t,” said Zuger. “It would make sense (for a private equity buyer) at this point in the cycle because the business is depressed. If the private equity buyer believes we’re going to have a recovery and if the cost-cutting they’ve implemented comes to fruition, you might have a pretty good combination,” he added.

Options News Network’s chief investment strategist, Jud Pyle, said, “Just like many other stocks in the last few weeks, Harley-Davidson is popping on LBO rumors.”