Markets

Valassis, Insignia Stock Jumps on News America Marketing Group Settlement

By Jim Edwards

Updated on: March 19, 2009 / 10:22 AM EDT / MoneyWatch

Since News America Marketing Group bought Floorgraphics Inc. in what appeared to be a legal settlement of the corporate spying and sabotage litigation between them, the stock of two other direct marketing companies, Valassis and Insignia Systems, has gone through the roof.

Valassis, which has a much larger case pending against News America, went from just above $1 to $1.70 (see graph) -- not much in real money terms but a 70 percent increase if you bought right before the trial started. Insignia has gone from under $1 to $2 (see graph).

The news offers the hope that Valassis's stock will not be delisted by NYSE for trading too low. Back in the good old days of 2005, Valassis traded at $40.

Valassis, Insignia and FGI all have the same things in common: They all alleged that News America signed up their clients into anticompetitive contracts and spread lies in the marketplace about them. FGI and Insignia both alleged that News America offered to buy their companies, and when they declined set about trying to destroy them.

The settlement and acquisition of FGI by News America raises the probability that Valassis may succeed in its trial (paving the way for a jackpot jury verdict in favor of Valassis) or that News America may offer to buy Insignia in a similar settlement to FGI's.

Either way, victory would cause both companies' stock to jump even higher.