NCO Chief Executive Offers $27.50-a-Share Buyout (Update3)
2006-05-16 16:05 (New York)


     (Adds analysts comments' in third and fourth paragraph,
closes shares in ninth paragraph.)

By Demian McLean
     May 16 (Bloomberg) -- NCO Group Inc., the biggest debt
collector in the U.S., said Chief Executive Officer Michael
Barrist has offered to buy the company for $27.50 a share and
take it private. The stock rose 36 percent.
     The offer values the company at $888.6 million, based on
32.3 million shares outstanding as of May 8. The per-share bid is
a 44 percent premium over yesterday's closing price.
     Barrist's offer is seven times' earnings before interest,
taxes and amortization, said analyst William Sutherland of
Boenning and Scattergood Inc. in West Conshohocken, Pennsylvania.
     ``It's a good business, and that's a cheap multiple,'' said
Sutherland, who owns NCO shares and rates them a buy.
     Barrist told NCO's board in a letter yesterday that One
Equity Partners II LP would join him in the buyout and that
senior management could stay on. NCO would have 21 days to
solicit other bids, Barrist said.
     The collection company's clients include federal and state
governments chasing tax receipts, as well as businesses trying to
settle customers' overdue bills. Consumer debt in the U.S.,
excluding mortgages, rose 1.4 percent in March to $2.16 trillion.
     ``With the extension of credit we've seen globally in recent
years, few other companies are as poised to be a recipient of
that growth,'' said Michael Kaulkin, chief executive officer of
Bethesda, Maryland-based Kaulkin Ginsberg Co., which operates the
Web site CollectionIndustry.com.
     Barrist said he's lined up $1.2 billion in debt and equity
financing through Morgan Stanley and One Equity. A committee of
NCO's board is meeting today to consider the offer.
     Shares of Horsham, Pennsylvania-based NCO rose $6.95 to $26
at 4 p.m. New York time in Nasdaq Stock Market composite trading,
after trading as high as $27.16 earlier. The shares have risen 33
percent in the past year, compared with a 24 percent rise in the
Standard & Poor's Smallcap 600 Index.

--Editor: Byrd (psy).

Story illustration: Click on {NCOG <Equity> GP <GO>} for a graph
showing NCO's stock price.

To contact the reporter on this story:
Demian McLean in Washington at (1) (202) 624-1864 or
dmclean8@bloomberg.net.

To contact the editor responsible for this story:
Glenn Holdcraft at (1) (212) 617-8968 or
gholdcraft@bloomberg.net.

[TAGINFO]


NCOG US <Equity> CN
MS US <Equity> CN

NI US
NI PREMNA
NI PA
NI BNK
NI FIN
NI COS
NI SVC
NI LBO
NI CORPFIN
NI WNEWS
NI MOST

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