Providian Stock Up On Household Buyout Rumors January 10, 2002 13:45:25 (ET) (adds Providian no comment, analyst comment, background) NEW YORK, Jan 10 (Reuters) - Providian Financial Corp. (PVN,Trade) stock jumped more than 13 percent on Thursday on speculation that rival loan and credit card company Household International Corp. (HI,Trade) would buy the troubled credit card issuer, analysts said. But analysts discounted the rumors, saying Household would rather expand its portfolio of loans to people with tarnished credit histories on its own rather than acquire Providian's large book of receivables. Prospect Heights, Illinois-based Household instead might be looking at just a small piece of Providian's credit card loan portfolio, they said. "My take is that Household seems like an unlikely candidate," said Matthew Park, an analyst at Thomas Weisel Partners. "It's a little out of character from their stated policy of growing their subprime portfolio organically." Household was not immediately available to comment and Providian declined to comment. Providian stock was up 48 cents, or 13.3 percent, to $4.08 a share on Thursday on the New York while Household shares fell 24 cents to $56.86. Providian, the worst performer in the S&P 500 ((.SPX)) last year with a decline of 94 percent, is cutting jobs and looking to sell off $3 billion of credit card receivables to boost performance. The company, which has focused on lending to people with relatively poor credit histories, has been hit hard by rising loan losses and slack demand in the weak economy. The company's problems, as well as its size, made it an unattractive takeover target for Household, analysts said. Providian has about $32 billion in managed receivables. "It would wreck Household's stock," Fox-Pitt, Kelton analyst Reilly Tierney about the takeover rumors. "Providian's such a mess, and it's so big."
