Is Goldman Sachs Really Making a Play for Ormat?

Ormat (ORA), a company that engages in the geothermal and recovered energy power business, continued its recent surge amid conflicting takeover rumors. Early in the day on Wednesday, rumors had the Apax fund paying $2.25 billion for the company, but both parties strongly denied these rumors.

Then the next rumor hit, saying that none other than Goldman Sachs (GS), was looking into buying a 10% share of the company. Interestingly enough, ‘no comment,’ was the response of choice. Sounds like we have a winner! Although it’s important to note that Merrill Lynch (MER) came out with a note that it thinks that nothing is going to happen. The fact that we had no denials from either side, sure sounds like something is going on.

Ormat's shares have been flying, and have surged 25% over the last two months. In late June I wrote about a possible takeover, and since then the stock is up over 43%.

With crude prices over $87, there is continued strong interest in alternative energy, and I would expect consolidation in the sector. I think that Ormat is an interesting target, and wouldn’t be surprised to hear a deal announced in the not too distant future.

Disclosure: The author has a position in ORA as of October 17, 2007, but has no holdings in any other stock mentioned.

ORA 1-yr chart: