H&R Block Seen Inviting Buyout in Bank Removal
Removing the bank embedded in H&R Block Inc. would turn the biggest U.S. tax preparer into a potential takeover target.
H&R Block said last week that it hired Goldman Sachs Group Inc. to evaluate options for its six-year-old banking unit amid new Federal Reserve rules requiring savings and loans to hoard more capital. Jettisoning the bank would simplify the business and may boost the odds of a deal, shareholders Yacktman Asset Management LP and Kempner Capital Management Inc. said.
The company is mulling alternatives after a decade-long malaise in its share price. At $17.29, H&R Block trades at a price first reached in 2001 and 43 percent below the record high from 2004. H&R Block’s price-earnings ratio using this year’s estimates is less than 93 percent of U.S. consumer discretionary services companies, and analysts foresee the end to a four-year decline in sales, according to data compiled by Bloomberg. While Schwartz Investment Counsel Inc. said its cash flow generation may lure private equity buyers, Foxhall Capital Management Inc. said mortgage lenders may see value in combining with H&R Block.