More Bounce at Span-America?

Span-America Medical Systems (SPAN ) is another company with disgruntled stakeholders seeking improvements. A maker of specialized mattresses and foam products for the health-care industry, Span has earned profits since it went public in 1983. But Ray Cabillot of Farnam Street Partners, which owns 9% of Span, says the stock is worth twice its current price of 8 a share. He notes that the mattress business is growing at 40% a year and the other units at 20%.

Span says profits in 2003, ending Sept. 30, will be lower than the 64 cents a share it reported in fiscal 2002, partly due to the cost of rolling out new medical devices. Cabillot says that, with a cash hoard of $7.5 million, or $3 a share, and no debt, Span should repurchase shares -- or explore ways to boost the stock. He says Span is blocking board changes and refuses to dump a poison pill that management has tightened. Jerry Zucker, who heads InterTech Group and owns 10%, says in a 13D filing that he is seeking changes in the board or the corporate structure -- or pursuing "an extraordinary" deal to enhance shareholder value.

CEO James Ferguson insists he is not "trying to obstruct someone from waging a proxy fight or from making a reasonable offer." But he wouldn't say whether he had been approached by a suitor.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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