New Century Financial (NCEN), a specialty finance company engaged in subprime mortgage lending, has quietly hired the New York investment firm PaineWebber to come up with strategic options, including the sale of the company, say some investment pros familiar with the situation. By June 23, PaineWebber is expected to tell directors that two companies are interested in acquiring New Century. One, say these sources, is a financial-services company with a $15.2 billion market value and assets of $186 billion. The other is a bank holding company with a market cap of $15.7 billion and $81 billion in assets.
Shares of New Century, as high as 15 in late December, have fallen to 7, partly because of the pressure on financial companies and buyout rumors last year that failed to materialize. "This time, management is open to selling the company," says one New York money manager. He figures with a book value of 9 1/2 a share, New Century is worth 15. It's expected to earn $2 a share this year and $2.20 next. The company declined to comment as a matter of policy.