Shares of Lexmark jumped 6.7% to $43.80 on Wednesday, trading as much as 7.5% higher to $44.15 intraday, on speculation the company is a buyout target, with one possible acquirer rumored to be Dell. Lexmark's most actively traded options, $45 calls for October and November, surged sixfold and threefold, respectively, on volume 19x higher than the prior 20-day average. An options analyst at Optionetics.com said, "There's definitely a rumor making the rounds," adding that "players in the options market see it as credible, because there's heavy trading in the $45 strike price. The industry has been consolidating, so this one might have some merit." The co-founder of optionmonster.com said the surge in Lexmark's options is based on bullishness for its earnings prospects and a rumor Dell CEO Michael Dell might be looking at the company. An options trader at Meridian Equity Partners called it "a perennial Dell takeover rumor." A Lexmark spokesman declined to comment on the rumors as a matter of company policy. A Dell spokesman said the company won't comment on "rumors or speculation." Lexmark is up 1.5% to $44.45 in thin pre-market trading.
Sources: Bloomberg, Reuters
Commentary: Bernstein Grants Lexmark Its Sole "Buy" Rating • Stocks With the Least Analyst Love
Stocks/ETFs to watch: LXK, DELL. Competitors: HPQ, CAJ, EK
Earnings call transcript: Lexmark International Q2 2007
Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.