Over-the-counter trading in the stock of HomeClub, a fast-growing chain of home improvement centers based in Fullerton, was halted Monday amid speculation by industry analysts that the company may announce that it is being acquired by a larger firm.
Officials of HomeClub, a 28-month-old company that caters to do-it-yourselfers, would say only that the firm will make an announcement today. It made its initial public stock offering only two weeks ago, selling 2.3 million shares at $9 each. The stock has risen to $12 per share since Oct. 29.
But the company fell far short of its original goal to sell its initial offering at up to $17 a share. Still, some market analysts consider HomeClub an acquisition plum because of its high sales volume, strong management expertise and the low percentage of its stock that is owned by company insiders. The directors of the company, including founders Robert J. McNulty and George J. Handgis, own just 9.29% of its stock.
One possible suitor for HomeClub may be Jack Eckerd Corp., a Clearwater, Fla.-based owner of retail drug, department and video home entertainment stores throughout the Southeastern states. Officials of Eckerd, which currently owns 17.23% of HomeClub's 10 million outstanding shares, could not be reached for comment.
"I would say (HomeClub) is an ideal target for a takeover. The company's stock is primarily held by venture capitalists, and they are notorious for going with whoever will offer them the best price for their stock," said Larry Butler, vice president of Newport Securities, a Newport Beach brokerage firm.
Butler called HomeClub "a hot ticket item" because of its rapid sales growth. According to the company's Oct. 29 prospectus, it earned $1.7 million on sales of $90 million for the six months ended July 28, compared to a loss of $727,000 on sales of $21.9 million for the 1984 period.
Since opening its first two discount warehouse outlets in Norwalk and Fountain Valley in October, 1983, HomeClub has opened 13 more in Fullerton, San Jose, San Bernardino, Canoga Park, San Jose, South Sacramento, Santa Rosa, El Monte, Fresno, Bakersfield, San Marcos and Montclair.