St. Joe could be a takeover target: Third Avenue

By Ilaina Jonas

NEW YORK (Reuters) - Michael Winer, portfolio manager at Third Avenue Real Estate Value Fund TAREX.O, the largest shareholder of St. Joe Co.(JOE.N: Quote, Profile, Research, Stock Buzz), on Monday said he wouldn't be surprised if the Florida land developer was a takeover target.

But an offer at the company's current share price would be too low to win the fund's support, he said.

"I'm not aware of speculation that the company is going to be taken private," Winer said at the Reuters Investment Summit in New York. "Would I be shocked? No."

St. Joe, which is based in Jacksonville, Florida, and has vast land holdings in the Florida panhandle, entered the home-building business in 1997. When the market took off, so did the company's home-building operations, It built 1,241 homes in 2003, rising to 1,796 in 2005, the height of the U.S. housing boom.

The company's share price also took off, rising from a range of $29 to $31 in July 2000 to a high of $84.74 in July 2005.

When the bottom dropped out of the housing market in the succeeding months, Florida was hit hard, particularly the state's northeast area. St. Joe's stock price tumbled to a roughly two-year low of $41.67 last June.

In early September, St. Joe said it would exit the home-building business and focus on its primary land-holding business, which takes land through the permitting process and sells it to home builders.

Since then, the stock began to rise on speculation that the company could become a takeover target. The stock on Monday afternoon was trading at $55.29.

"It's really all about future development. It's not about what they're selling today," Winer said of the share price.

"St. Joe is in a market that is going to grow," Winer said. "There's no doubt that people are going to continue to move to Florida, whether it's northern Florida, southern Florida, or central Florida.'

Winer said his fund would not support a takeover offer near the current price because it would not reflect the value he sees the company generating when the housing market rebounds.

"I don't have a price in mind, but I'd know it if I saw it," he said. Third Avenue management as a whole controls 19.58 percent of St. Joe.

"If something like that happened, the current price is too low," he said. "Any road to M&A (merger and acquisition activity) would obviously have to come through Third Avenue.

"I just think there's way too much value to be created over the next five years, 10 years, 15 years and 20 years to think that the company should go private," Winer added.

(Additional reporting by Julie Haviv)