Harley-Davidson Inc (NYSE:HOG), the iconic US motorcycle maker with the amusing stock ticker of “hog”, found its shares dramatically skidded on Tuesday after takeover rumours appeared to come to pass.
The stock lost just shy of $6 on Tuesday, closing down 10.8% at $48.37, made worse by the overall falls by Wall Street.
On Friday, the first day of the third quarter and the last before the July 4 Independence Day holiday, Harley shares had raced 19.8% higher, which seemed to track a typical day’s rally over hills on one of their famous bikes.
In fact, on Tuesday, Harley shares proved to be the worst-performers in the S&P 500, beating the losses of 10.4% by next biggest decliner, Southwestern Energy Co (NYSE:SWN).
Rumours on Friday had been that Milwaukee-based Harley may be the subject of a takeover by KKR (NYSE:KKR), the New York-based private equity firm which specialises in leverage buyouts.
At a time when US markets hit August 2015 highs on July 1, that was purely turbo-driving Harley shares. So when the rumours fizzled out they happened as New York stocks were also is decline.
The rumour – unfounded it seems – may have started in a trader’s pit stop somewhere, but equally it could have been a garage forecourt as no one has a clue from where it came. But the Friday rumour certainly distracted the market focused on the UK’s Brexit vote fallout for long enough.
Harley will report results at the end of the month. Broker RW Baird said the company’s balance sheet was strong with a manageable $750mln of debt on the books.
That said, the broker did offer a moderating effect as it cut its rating on Harley to neutral from outperform, but maintained its target price at $54.
UBS analysts also downgraded the stock to neutral. KKR was previously rumoured to be making a bid for Harley-Davidson in 2010. That too was never proven.