Loews Corp. Chief Executive Officer Jim Tisch told investors they could be waiting a while for the company’s next takeover.
“After all these years of low interest rates and quantitative easing, what we have is markets, both fixed-income and equity markets, that are priced for perfection,” he said on a conference call Monday. “For the time being, businesses look like they’re priced too high for us.”
Tisch has been adding hotels at the lodging unit and buying back shares as his hunt for takeovers stalls. Last year he sold HighMount Exploration & Production LLC after being caught off-guard by a decline in natural gas prices. New York-based Loews also owns commercial insurer CNA Financial Corp. and Diamond Offshore Drilling Inc.
“We’re actively seeking to diversify our portfolio of businesses, but we don’t want to rush into a deal simply because we have the funds available,” Tisch said. “Current valuations for assets and securities don’t lend themselves to the kind of equity returns we want.”
Loews slipped 6 cents to $41.67 at 4:01 p.m. in New York, and has dropped about 5.5 percent in the last 12 months while the Standard & Poor’s 500 Index gained 12 percent. The company said Monday that first-quarter profit from continuing operations fell by more than half to $109 million as the drilling business took an impairment charge tied to the value of rigs amid the slump in oil prices.
Tisch said that potential buyout targets are now trading at 10 times earnings before interest, taxes, depreciation and amortization, rather than a ratio of six-to-one as in other eras. He said the time will eventually come when the metrics are more favorable.
“At some point in time something will happen, people will lose all the confidence they have, and opportunities will present themselves,” he said. ‘It could be a while.’’