bloggingbuyouts

Wal-Mart(NYSE:WMT) volatility up on unconfirmed Asian investment chatter circulating. WMT is recently up $0.38 to $43.55 on unconfirmed chatter of an Asian investment by a new sovereign investment fund of the Chinese Government and Temasek Holdings, an Asian investment house based in Singapore. The Walton family control approximately 38% of the company's stock. WMT has a market cap of $178 billion with long term debt of $29 billion. WMT over all option implied volatility of 26 is above its 26-week average of 22 according to Track Data, suggesting larger risk.

Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Usually when you're hear about a company being "formally investigated", someone's talking about the SEC.

Leave it to the legendary Robert Chapman to change the rules on that one too. On Tuesday, Chapman's fund started a tip hot-line for Vitesse Semiconductors (OTC: VTSS). The fund owns 5.4% of the company, and is asking for information on "backgrounds and affiliations of non-shareholder elected directors Willow B. Shire and Steven P. Hanson. This investigation is the direct result of the failure of Vitesse's entrenched incumbent Board of Directors ("the Board"), consisting of Christopher Gardner, Edward Rogas, Vincent Chan, Alex Daly, Willow Shire and now Steve Hanson, to seek and obtain exemptive relief from the U.S. Securities and Exchange Commission to call a meeting of shareholders to elect their own representatives to the Board."

The press release contains more of the rhetoric that we've come to love from Chapman, and invites "any party who has endured professional interaction with or exposure" to the two directors to call or email Chapman's firm -- anonymously if they wish.

This is pretty exciting stuff. By announcing a "formal investigation" of a company he owns, Chapman may finally have outdone himself.

For more background on the situation with Vitesse, check out TheStreet's coverage.

In what could prove to be a landmark case of shareholder activism, New York hedge fund Perry Capital LLC has asked (subscription required) NEC (NASDAQ: NIPNY) to explain why the company why the company spurned its offer to acquire 25% of its NEC Electronics business.

What makes this different from numerous other situations? NEC is a Japanese company, and shareholder activists have not fared particularly well there.

Perry takes exception to a common practice in Japan: Parent companies owning majority stakes in publicly-traded subsidiaries. Oftentimes, shareholders of the subsidiaries get the shaft because the company is run for the benefit of the parent. This is similar to the situation that can arise in the United States when insiders own such a large stake in a company that it can become a personal piggy bank, and no outside shareholder can dream of effecting change.

Perry says its effort to buy 25% of the company was part of a plan to loosen the parent company's stranglehold and unlock value for all the minority shareholders.

The system of parent-controlled publicly traded subsidiaries is almost universally seen as bad governance, and breaking up that system in Asia would be a very positive export for a New York hedge fund.

Three proxy advisers have now spoken out against the $9.75 private equity offer for Topps Company Inc (NASDAQ: TOPP). What an ugly mess this has become -- playing out much more like a soap opera than a day at the ballpark. Let's review:

• In March, Topps gets an offer to be acquired for $9.75 a share from an investment group led by Michael Eisner's Tornante Co. and Madison Dearborn Partners.
• Topps agrees to the offer.
• In May, Upper Deck steps to the plate with a $10.75 a share counter offer.
• Yesterday, Upper Deck withdraws its offer based on "flawed" negotiations from Topps.
• Topps files with the SEC today, saying Upper Deck misled the company with its offer.

Topps is now due to vote on the original offer from the investment group, but three proxy adviser firms -- Proxy Governance, Institutional Shareholder Services and Glass Lewis & Co, have all recommended rejecting the deal.

Wedbush Morgan said in June that they believe Topps shares are worth between $11.50 a $12.00. With that in mind, along with the proxy firms' lack of support, the chances of this deal getting done for under $10 a share are not looking realistic.

This post was originally written by Douglas S. Roberts for BlogginStocks.com.

The Fed along with the other central banks continued to infuse liquidity into the markets via the discount window and other means and has indicated that it will continue to do so until the credit situation stabilizes. Why the continuing concern in the financial markets?

The Fed has indicated the stability of the banking system and the health of the economy are its primary concerns. The survival of hedge funds, traders, and other financial players is only a problem if it affects these primary concerns. Through the Discount Window, the Fed has found a way to assist the banks only.

This has caused quite a panic among hedge funds who claim that this approach cannot work. In essence, they say that the hedge funds are too big to fail without ripple effects throughout the economy. This may not be quite the truth. In 1984, the Fed successfully took over and later sold the then seventh largest bank called Continental Illinois National Bank and Trust Company. It too was considered "too big to fail." The economy continued to prosper.

Remember the Fed has substantial reserves to implement monetary policy as they see fit. It does not pay to fight the Fed. It can persist in its course of action longer than you can remain solvent. Today, it appears determined that the non-bank players who took on too much risk bear the consequences of their actions. In its view, the downsizing of Wall Street bonuses does not constitute a valid reason for a rate cut.

For those financial market participants who believe that deterioration in the economy will force the Fed to cut the Federal Funds rate, I would not be so sure. The economic numbers thus far have held up. The initial unemployment claims numbers this morning were in line. The Fed will cut rates if the numbers deteriorate. However, those seeking a bailout like 1998 may be disappointed.

Doug Roberts is the Founder and Chief Investment Strategist for FollowtheFed.com, an independent research firm focusing on investment strategies using the Federal Reserve's impact on the stock prices.

There's been lots of buzz that the upcoming KKR IPO is dead. In fact, a recent report from The Times of London suggested that the offering has been postponed.

Well, maybe not. KKR has indicated that the rumor is not true.

I have to admire the optimism of KKR (hey, it's probably been a key the firm's success). No doubt, it's been a crummy time lately for private equity. There's a credit crunch. And, of course, the stock prices of Blackstone (NYSE: BX) and Fortress Investment Group (NYSE: FIG) have been miserable. It even looks like Carlyle is going to forgo an IPO for 2007.

But private equity is about the long term. And it's in bad markets where the opportunities seem to pop up, especially for those firms that are well capitalized.

A key test will be KKR's upcoming financing of the mega buyout of First Data Corp. (NYSE: FDC). If the deal can get done, there may be some hope for the KKR offering.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Founded in 2000, SelectMinds' original mission was to develop an online system for alumni. Well, it hasn't gained much traction. Besides, Facebook is the dominant player in the academic space.

Well, SelectMinds is taking another tact. The company is developing a system to allow for social networking in the corporate environment.

In fact, this week the firm obtained $5.5 million in venture capital. The investor is the venerable Bessemer Venture Partners.

Actually, SelectMinds has snagged some top customer references like JPMorgan Chase (NYSE: JPM), Lockheed Martin (NYSE: LMT), The Dow Chemical Company (NYSE: DOW), and Ernst & Young.

I had a chance to interview Robb Hecht, who is an expert on social networking and operates MEDIA 2.0. According to him:

Alan Meckler, CEO of Jupitermedia Corp. (NASDAQ: JUPM), is a deal junkie. Over the years, he's racked up quite a few transactions in the internet space.

One of his recent purchases is the $20 million deal for mediabistro.com, which is a career and community site for creative professionals. A big help in that deal was Meckler's securing of a $115 million senior credit facility from KeyBanc Capital Markets.

But will the recent turmoil in financial markets be a big challenge for deals? Actually, Meckler doesn't think so and has an intriguing post on the matter on his always informative blog. In fact, he says that deal flow has been strong. Why? He posits that it could be that "many entrepreneurs might be panicking."

And, for savvy buyers, that can certainly be a good thing.

But, I think there's something else; that is, some Web 2.0 properties are having lots of difficulties getting traction. The competition is fierce, barriers to entry are often low and it's not easy to monetize things. And there haven't been many worthwhile buyouts in the space.

But Meckler -- who has the luxury of a large infrastructure and lots of business savvy -- should be able to capitalize on the situation.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Hershey Co. (NYSE: HSY) -- calls active on renewed Cadbury Schweppes (NYSE: CSG) chatter and Deutsche Bank report. HSY is recently up $1.26 to $46.43. CSG, the world's largest confectionery company, is in the process of an auction of its U.S. soft-drink business. The sale could net CSG as much as $16 billion, some of which the company is expected to retain to fund an expansion of its confectionery business. Tootsie Roll Industries Inc. (NYSE: TR) and HSY have been frequently mentioned as CSG buyout candidates. CSG has U.S. licensing agreements with HSY. DBAB says this about HSY: "given the weak fundamentals, we believe the Trust may now be reconsidering its position on a sale. Assuming 13x 2008E EBITDA, a bid could equal at least $55 a share." HSY call option volume of 8,849 contracts compares to put volume of 2,561 contracts. HSY September option implied volatility of 26 is above its 26-week average of 20 according to Track Data, suggesting larger risk.

Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

On July 20th I highlighted the "Dream Come True" in Avaya Inc. (NYSE: AV). At the time, I thought the $17.50 acquisition price could be bested by a competing bidder and the current acquisition price served as a floor. Since this post the stock has managed to trade off several percentage points but I believe the situation has only become more attractive.

The deal is still expected to close in the fall. Assuming the deal closes December 1st (most likely a very conservative estimate) the current annualized rate of return on the deal is roughly 16% -- a very attractive yield if you believe the deal should go through.

Should you believe in this deal's prospects? In my opinion, the answer to this question is an emphatic yes. Interestingly, two of the company's executives agree as they recently bought $1.4 million of stock going into this deal. As a Wall Street Journal article reports [subscription] today, insiders rarely buy stock before their company goes private. This buy exemplifies confidence in the deal's prospects from the inside. The buyers -- TPG and Silver Lake -- have already arranged financing, according to the WSJ piece.

If the chances of the deal being completed remain good, then why would the stock sell-off, you might ask. I think the answer to this question is two-fold. First, nearly every company in the process of an LBO sold off as the credit market showed signs of weakness during the last two months. Additionally, many funds have been cutting their merger arb exposure, likely forcing liquidations in Avaya, among other companies.

Avaya is still an interesting situation. At the current price, you are set to earn a 4-5% absolute rate of return on your money (roughly in-line with Treasuries and CDs). But you would expect to make this in 2-4 months instead of twelve. With the company's executives loading up on shares and the private-equity buyers already having financed the deal, I think the likelihood of this deal being completed remains strong.

This post was originally written by Beth Gaston Moon for our sister site, BlogginStocks.com.

Spencer Gifts, roughly 600 mall-based stores strong, has long established itself as a one-stop shop for pop culture paraphernalia, gag gifts, and (clears throat) "adult" novelty items. Spencer's is also the parent of about 300 Spirit Halloween superstores, which do seasonal business for those among us desperate for the perfect Buffy the Vampire Slayer-related get-up.

Tuesday, the eclectic retailer's privately held parent, Gordon Brothers, announced plans to sell Spencer Gifts to ACON Investments, a Washington, D.C.-based private equity firm. Financial terms of the buyout were not disclosed. GB Merchants Partners, the private-equity arm of Gordon, will keep a minority stake in Spencer's. Additionally, the company will continue to be managed by its current team of executives, led by former Linens 'n Things president Steven Silverstein.

In a statement published in Gifts and Decorative Accessories, founding ACON partner Ken R. Brotman noted that "The ability to acquire Spencer's and Spirit Halloween was extremely compelling . . . a solid foundation [has been built and] will ensure Spencer's continued success."

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Google Inc (NASDAQ: GOOG)'s YouTube is not the only popular video destination. For example, there is Metacafe, which has more than 25 million unique monthly viewers. Metacafe has built strong community features and also has developed regional versions of the site. It's known as "audience-driven programming."

The company recently announced a $30 million round of venture capital from Highland Capital Partners, DAG Ventures, Accel Partners and Benchmark Capital.

I had a chance to interview Chase Norlin, who is the founder and CEO of Pixsy (a multimedia search engine). According to him, "The Metacafe funding makes perfect sense and sends a signal to the market that they're really going for it in the shadow of YouTube. Their prospects look good given they're clearly one of the top three players in that category. Paying out users via their Producers program makes a lot of sense; the real question is, how big is the customer generated content market and is there an upcoming saturation of viral video on the web? Given their large audience, the model bodes well if they can make inroads in semipro and professional quality content."

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Accredited Home Lenders (NYSE: LEND) -- volatility Elevated on concerns over Lone Star deal. LEND, a mortgage company originating, financing, securitizing, servicing and selling non-prime mortgages, announced this morning no new U.S. loan applications will be accepted and LEND will have a total workforce of 1,000, down from 2,600 employees as of 6/30/07. On 8/22/07, LEND announced the sale of $1 billion in loans to unnamed investor. LEND filed a complaint on 8/13/07 claiming Lone Star had breached the obligation of its $15 merger agreement announced on 6/4/07. Lone Star counterclaims have declared LEND didn't meet conditions necessary to close the current tender offer. LEND overall option implied volatility is at 158 according to Track Data, suggesting large risk.

NYSE Euronext (NYSE: NYX) -- implied volatility Elevated at 42. NYX closed at $73.38. NYMEX (NYSE: NMX) says, "the company has talked to certain parities regarding a potential business combination." NMX goes on to say "that any transaction would have to be at a meaningful premium to the company's current share price." NYX has been frequently mentioned as potentially interested in NYX. NYX over all option implied volatility of 42 is above its 26-week average of 38 according to Track Data, suggesting flat risk.

Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Antitrust is always tough to predict. The laws are sketchy, and markets can change quickly. Besides, politics can play a big role.

That's why the Federal Trade Commission (FTC)'s antitrust lawsuit over the Whole Foods Market (NASDAQ: WFMI) and Wild Oats Markets (NASDAQ: OATS) linkup is so interesting.

The FTC believes that the transaction will reduce competition and, as a result, be harmful to consumers. However, federal Judge Paul Friedman doesn't think so. In fact, yesterday we got his 93-page opinion on the matter (according to a report in Reuters).

Delta Airlines Inc. (NYSE: DAL) -- volatility at 54; DAL names former Northwest Airlines Corp. (NYSE: NWA) leader Richard Anderson as CEO, sparking merger talk. DAL closed at $17.71. Bear Stearns says, Anderson "could facilitate consolidation," and "complementary international routes and limited domestic overlap could make for a compelling case of DAL & NWA." Delta's unsecured creditors rejected a hostile takeover bid by US Airways (NYSE: LCC) on 1/31/07. DAL over all option implied volatility of 54 is above its 16-week average of 49 according to Track Data, suggesting larger price risk.

NYMEX Holdings Inc. (NYSE: NMX) -- volatility Up; NMX says it had talks regarding potential combination. NMX closed at $118.78. NMX says, "the company has talked to certain parities regarding a potential business combination." NMX goes on to say "that any transaction would have to be at a meaningful premium to the company's current share price." NMX over all option implied volatility of 52 is above its 26-week average of 37 according to Track Data, suggesting larger risk.

Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.