(Reuters) - Radian Group Inc (RDN.N) shareholder and asset manager Clinton Group pushed the mortgage insurer to disclose more details about its operations to potential bidders, and said it was aware of at least one party keen on buying the company.
Clinton, which has a 1.4 percent stake in Radian, wrote to the company saying a former industry executive had expressed serious interest in acquiring Radian at a price significantly above its current trading level.
Radian, in response to Clinton Group’s comments, said it has recently held several detailed discussions with the shareholder to review ideas and strategies for improving disclosures.
“It is Radian’s general policy not to respond to rumors about the company, including the purported expressions of interest referenced in the Clinton letter,” the company said in a statement.
The mortgage insurer’s shares, which traded at more than $60 before the housing meltdown in 2007, closed up 18 percent at $2.39 on the New York Stock Exchange on Monday.
Clinton also asked Radian to disclose sufficient data about its legacy mortgage insurance and other businesses that would help potential bidders estimate the company’s liabilities.
“If the board and management team choose not to adopt one or the other alternative that we have suggested, we will feel compelled to take additional steps to ensure shareholders are being treated appropriately,” Greg Taxin, managing director of Clinton Group, told Reuters.
The best approach for creating shareholder value is to sell Radian to a buyer that has the expertise to understand and value the legacy book and future business opportunities, the asset manager said.
Clinton had earlier called for a change in toy company Jakks Pacific Inc’s (JAKK.O) board in March, after the company adopted defenses against takeover overtures made by Oaktree Capital Management.
Earlier this month, Radian posted its second quarterly loss in a row, and said its main mortgage insurance unit would likely breach risk levels in the second half of the year.
These insurers underwrote millions of mortgages at low premiums in the heady days of the housing boom.
But the wave of foreclosures unleashed by the housing crisis that followed forced the companies to pay out billions of dollars, leaving them with weak balance sheets and an even weaker stock prices.
Reporting by Tanya Agrawal and Ashutosh Pandey in Bangalore; Editing by Anil D'Silva, Viraj Nair