RPT-UPDATE 3-St. Joe considers sale, Morgan Stanley advising

Wed Feb 9, 2011 9:41am EST

(Repeating to add Breakingviews link)

* St. Joe considering sale, Morgan Stanley advising

* Considering asset sales, strategic alliances

* Shares up 11.2 pct after hours (Adds comment from Greenlight Capital spokesman; updates shares)

NEW YORK, Feb 8 (Reuters) - St. Joe Co (JOE.N), a Florida real estate company targeted by famed hedge fund manager David Einhorn, is considering a sale among other options.

St. Joe said in a statement on Tuesday that it would consider options, including a revised business plan, operating partnerships, joint ventures, strategic alliances, asset sales, strategic acquisitions and a sale.

The company, which had a market capitalization of $2.7 billion as of Tuesday's stock market close, said it was being advised by Morgan Stanley (MS.N). St. Joe shares were up $3.25, or 11.2 percent, at $32.30 in thin after-hours trading. They were up 13.6 percent earlier in the day.

(For a Breakingviews column please click [ID:nN08291656])

"With the company trading at more than three times its value, it is easy to see why the Board wants to sell, but hard to fathom why anyone would buy. The lack of cash flow creates a particular challenge for any financial buyer," a spokesman for Einhorn's Greenlight Capital said in an e-mailed statement on Tuesday.

Einhorn, who first rose to prominence for making a prescient call on Lehman Brothers' accounting troubles before its collapse, has criticized St. Joe's development plans.

He said in October that St. Joe was "stuck" after making an aggressive bet on beachfront developments that have gone nowhere.

"Management should sell the company, but it can't because the stock is too high," he said in October.

Einhorn has held a short position on the stock.

CNBC reported on Monday that investor and director Bruce Berkowitz, head of mutual fund Fairholme Funds Inc, would push to restructure St. Joe's board.

Fairholme, which owns about 29 percent of St. Joe, has two seats on the St. Joe board. St. Joe owns more than a half-million acres of land in the Florida Panhandle.

Berkowitz was not immediately available for comment on Tuesday. (Reporting by Jennifer Ablan, Megan Davies, Ben Berkowitz, Jonathan Stempel and Clare Baldwin; Editing by Muralikumar Anantharaman) ((megan.davies@thomsonreuters.com +1 646 223 6112; Reuters Messaging: megan.davies.thomsonreuters.com@reuters.net))

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