Maybe buying ADVO wasn’t such a great idea?
The Wall Street Journal reports that Valassis, the company that bought ADVO earlier this year in a contentious takeover struggle, has lost half of its market value since the acquisition. While revenue for the combined company was up in the second quarter, profits were down 50%. More importantly from an investor’s point of view, the company had to lower its own earnings expectations, blaming the ‘unpredictability’ of ADVO’s business.
On August 6, Valassis shares hit their lowest price in a decade at $7.67. While the price has risen since then, closing yesterday at $10.28 (half of what it was worth a year ago), the Journal suggests investors aren’t holding their breath waiting for a full recovery: “There are plenty of investors betting the stock price will fall further, with more than 20% of Valassis’s float sold short.”
You win some & you loose some!
That’s the risk one takes with takeovers………..