bloggingbuyouts

Back in August, BloggingStocks writer Kevin Kelly suggested that readers take a look at Steven Madden (NASDAQ: SHOO), a well-known maker of middle- to upper-market footwear.

His reasoning was excellent, but the stock continued its decline -- perhaps making it more attractive than others. Apparently some other people agreed with Kevin's logic because the stock is up more than 11% today after the company announced that it was putting itself up for sale.

According to the press release announcing the move, Madden has "received inquiries from third parties with respect to an acquisition of the Company and shareholder communications urging that the Company explore alternatives to enhance shareholder value. The Board of Directors has determined to evaluate strategic alternatives available to the Company and, to this end, has formed a Strategic Review Committee..."

The stock looks cheap compared to its peers, and the company's efforts to find a sale could yield favorable results for shareholders. If you didn't get into Steve Madden when Kevin first suggested, you may have a terrific opportunity now.

Tribune (NYSE: TRB) is recently down $1.42 to $26.50. Sam Zell announced on 4/2/07 his group would pay TRB shareholders $34 per share. The closing has been expected to occur in the fourth quarter of 2007. The Chicago Tribune reported, "A sudden uproar on Capitol Hill over media ownership rules might disrupt TRB's chances of getting the temporary cross ownership waivers needed to complete its planed $8.2 billion deal to go private." TRB November option implied volatility of 50 is above its 26-week average of 28 according to Track Data, suggesting larger price risks.

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

Facebook is reportedly close to making a decision on which sucker, uh, benefactor it will allow to throw millions of dollars at its feet. Speaking at the Web 2.0 conference in San Francisco Wednesday, Facebook CEO Mark Zuckerberg told his fan club, um, audience members that the new financing was "almost wrapped up," while noting that an initial public offering was "years out."

Though some pundits have suggested that Facebook remain independent and move forward without a partner, in many ways the rationale for taking the money and running, that is, building the business, makes more sense. Facebook competitors include the formidable News Corp.-owned MySpace.com and Google Inc., which may prove the greatest threat to Facebook.

Continue reading about Facebook at TechConfidential.com.

A number of news reports in the last few weeks have drawn attention to the involvement of private equity firms in health care companies, particularly nursing homes. Now comes news that Congress wants to look into the situation. Senator Hillary Clinton of New York, a Democrat, and Republican Senator Charles Grassley of Iowa have asked Congress to investigate the situation.

The source of the growing concern about care at for-profit nursing homes owned by private equity firms is an article in The New York Times published in September. The title of the article sums up the situation pretty well: "At Many Homes, More Profit and Less Nursing." It seems that when private equity gets involved in providing nursing care, more money goes toward making investors comfortable and less toward the elderly folks who actually live in the facilities.

I doubt that too many readers will find this claim surprising. Private equity funds search for return on investment. If a couple thousand old people live a little less comfortably, or die a little sooner -- well, too bad. Profits must be made, and the higher the better. What may come as a surprise, though, is the size of this market. For example, the Carlyle Group plans to buy Manor Care Inc. (NYSE: HCR), the largest U.S. nursing home owner, for $4.9 billion. That's an awful lot of bedpans.

And it turns out that private equity firms are ideally suited to run these operations -- assuming that what you want is the highest possible profit rather than, say, excellent care for the elderly. Private equity excels at wringing out costs, and so has no trouble firing many of those expensive nurses who take care of the patients. Private equity also loves to create debt and ownership structures so complex that no one can figure out who actually owns a business -- thus shielding the owners from lawsuits. And the business deals with a powerless group of consumers, many of whom are subsidized by government payments. No wonder private equity firms are jumping into the business! Just hope that your elderly relatives stay healthy and strong . . .

It's still slim pickin's for private equity deal making. But with the super growth in dot-coms lately, maybe PE firms can find action there?

Well, interestingly enough, Spectrum Equity has shelled out $300 million for The Generations Network (for a majority stake). The company operates sites like myfamily.com, Rootsweb.com, and Genealogy.com.

No doubt, The Generations Network has a strong market position. The sites attract 8.2 million unique visitors every month. What's even more impressive is that there are 900,000 paying customers.

A key to success: the extensive databases. For example, Ancestry.com has more than 5 million names. And there are some innovative new offerings. For example, DNA.ancestry.com provides services for genetic genealogy.

Yes, with the pick-up in the IPO market, Spectrum Equity investment does look timely. In other words, I think it's a good bet we'll see The Generations Network hit the public markets at some point.

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

When business customers look for a product, the first step is usually the internet. Yet companies often do not know how to capitalize on this.

Well, Eloqua has a suite off on-demand offerings to help things out. And to help boost things, the company raised $23 million in a venture round. Investors include Bessemer Venture Partners, JMI Equity and Bay Partners.

"Basically, we help companies have a digital dialogue with customers," said Joe Payne, CEO of Eloqua, in a BloggingStocks interview. "We do this through white papers, microsites, tracking and so on."

Payne thinks that companies are too quick to act on potential leads. "Before handing over a possible customer to a sales person, there needs to be some qualification. If not, there can be lots of wasted time."

Eloqua sells its service on a subscription basis. What's more, its customers include biggies like Sybase (NYSE: SY), Seagate (NYSE: STX), Nokia (NYSE: NOK), MySQL, and Nuance (NASDAQ: NUAN).

If you want to check out other recent venture fundings, click here.

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

The Wall Street Journal reports [subscription required] on the little-understood risks associated with hedging, particularly at some major financial institutions:

. . . some worry that today's improved and sophisticated hedging techniques have created a false sense of security among investors, and that a dramatic market collapse is still possible if issues arise in areas where there is little transparency, such as the world of derivatives.

The important thing to remember is that hedging can't really eliminate risk -- risk can only be transferred. It's like the first law of thermodynamics. It can be transferred from one trader or institution to another but it can never be eliminated. With some of the major investment banks having booked big gains on bets on the subprime collapse, many on Wall Street are still wondering who was on the other side of the trade. And there is also concern that the banks are failing to make adequate disclosures about how they are making their money. Some have asked whether the banks' earnings are, as Enron's earnings were once described, a black box.

Whenever you hear about hedging and risk management, remember that one company can control its risk. But there always has to be another party to the trade and there is simply no way for the economy as a whole to eliminate the risk of giving mortgages to people who can't afford them.

Attention venture capital firms, Ohio would like to invest in YOU! A few years ago, the Buckeye state created a $150 million fund-of-funds to invest in venture firms who would attempt to invest half of the money Ohio placed in their funds in the state.

Now the northeastern portion of the state containing Cleveland and Akron is piggybacking on that idea by creating a $50 million fund-of-funds to encourage investment in that region. The NEO Venture Capital Fund will be managed by Buckeye Venture Partners. Ray Leach, CEO of JumpStart Inc., an Ohio business incubator and seed investor, says five or six venture firms have already expressed an interest in participating in the program.

Continue reading about this new fund at TechConfidential.com.

The Dolan family's buyout of Cablevision Systems Corp. (NYSE: CVC) has hit yet another snag. Earlier this week, Doug McIntyre wrote about opposition to the deal from legendary manager Mario Gabelli, whose funds own 8% of Cablevision stock. Gabelli is arguing that at $36.26, the value offered in the deal, Cablevision shares are undervalued. He thinks the shares are actually worth $50 or more and is trying to get the Dolans to increase their $10.6 billion dollar deal accordingly.

Now comes the news that the largest institutional shareholder in Cablevision, ClearBridge Advisors, may also oppose the deal. ClearBridge owns 31.4 million shares, or 13.6% of Cablevision. ClearBridge's opposition should be enough to reject the offer.

A report in The New York Times suggests that ClearBridge may be playing a game of chicken with the Dolans. At $36.26 per share, ClearBridge would make money on the deal; it just wants to make even more. But so far, the game isn't working. Last night, James Dolan, Cablevision's CEO, released a statement saying the family would not increase the value of its buyout offer.

The vote on the deal is scheduled for October 24.

One of my favorite places is where I feed my frozen yogurt habit – Pinkberry. It seems that whenever I go there, the lines are long and the snacks are tasty.

The company has now raised a cool $27.5 million from Maveron LLC.

In addition to having a great product, Pinkberry has an appealingly simple menu. So, I can see why the chain has gained traction in fast-moving places like New York and Los Angeles.

Oh, and something else: the cofounder of Maveron is Howard Schultz, who is the chairman of Starbucks Corp. (NASDAQ: SBUX). No doubt, he'll bring some wisdom to the table -- for example, there are plans to introduce a stock option program. So far, Pinkberry seems to be doing well using the Starbucks playbook.

If you want to check out other recent venture fundings, click here.

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

Yesterday's $11.5 billion debt offering for Energy Future Holdings, formerly known as TXU Inc, proceeded nicely considering the market turmoil of the last few weeks, according to TheDeal.com.

It's still just a small portion of the $36 billion commitment, but the discounts were smaller than expected. This must come as a relief to KKR and Texas Pacific Group, which launched the $44 billion buyout in February.

Does this mean the debt markets are recovering? Perhaps. Meanwhile, there's still a lot of debt to sell.

CSX(NYSE:CSX) is a transportation company operating in two segments: rail & intermodal. CSX is recently trading at $43.50 in pre-open trading above its close of $42.42. Children's Investment Master Fund, a shareholder of 4.1% of CSX, is urging CSX Board of Directors to act immediately & voluntarily to improve CSX corporate governance and business performance. CSX is expected to report EPS on 10/17. Unconfirmed chatter has recently circulated CSX may break itself up. CSX has a market cap of $18.7 billion and long term debt of $5.7 billion. CSX November option implied volatility of 42 is above its 26-week average of 36 according to Track Data, suggesting larger price risks.

Saks(NYSE:SKS) is recently trading at $19.88 in pre-open trading, above its close of $18.72 after The Independent said "rumors re-emerged that Icelandic Investment group Baugur was set to bid for SKS, with an offer worth between $26 and $30 a share imminent." SKS is expected to report EPS on 11/20. SKS overall option implied volatility is at 59 according Track Data.

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

Legendary fund manager Mario Gabelli thinks that price for the Cablevision Systems Corp. (NYSE: CVC) buyout is way too low, and he has some independent backing. According to The Wall Street Journal, ISS Governance Services, one of the leading proxy advisory firms to institutional investors, said in a report Friday that "the theoretical target price for Cablevision, by a number of analysts, is much higher than the current offer price."

Gabelli's funds own over 8% of Cablevision. While the company's shares trade below $35, Gabelli says they are worth $50.

The fight between the powerful fund manager and the Dolan family, which founded Cablevision and plans to take it private, is going to get messy and will probably end up in court. Gabelli probably has one of two goals in pushing the Dolans on the deal's price. The first would be to get them to increase their buyout offer. The other would be to bring a third party like Comcast Corp. (NASDAQ: CMCSA) to the table to make a higher bid of its own.

The Dolans have tried to take the company private twice before. Each time the deal has floundered on price.

The founding family may have a card up its sleeve. The value of cable companies has fallen sharply in recent months on increased competition from satellite TV and broadband and video offerings from the big telecom companies. Shares in Comcast have fallen from $30 earlier this year to $24.

For the Dolans, an interesting defense of their bid goes like this: the value of cable companies is falling, so actually we are overpaying to take our company private.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Shares of Children's Place (NASDAQ: PLCE) were up more than 5% on Friday after the children's clothier and Disney Store owner announced that it was putting itself up for sale. The shares closed at $23.92, well off the 52-week high of $71.81. The company has been mired in scandal and recently CEO Ezra Dabah recently resigned after an investigation found that he had failed to comply with company rules regarding insider trading and reporting. Dabah remains on the board and own 18% of the company.

Here's where it gets interesting. According to The Wall Street Journal, "Mr. Dabah has told acquaintances that he wants to start his own private-equity firm and may be interested in buying Children's Place and the Disney Store chain it operates. Mr. Dabah had been CEO of Children's Place since 1991."

Children's Place hasn't filed a 10-Q in more than a year, has several shareholder class-action lawsuits pending against it, and its auditor, Deloitte & Touche, reported that it would not stand for re-election because it can't rely on information provided by Mr. Dabah and the company.

In other words, a big part of the blame for the company's troubles -- and resulting stock price -- could probably be placed on the shoulders of Mr. Dabah. With the stock so far off its highs, he may stand to benefit from his poor management if he ends up acquiring all or part of the company.

Heard of Snocap? There's a good chance you haven't. And that's a big problem. In fact, according to a report in C/NET, Snocap has laid off about 60% of its workforce.

The company -- which got its start in 2002 -- was the brainstorm of twenty-something Shawn Fanning. His prior gig was Napster, which had a big disruptive impact on the music business.

But Snocap wanted to be different; that is, it wanted to develop a platform to allow file-sharing sites to sell music in accordance with the law. Basically, the company handles such complexities as licensing and e-commerce distribution.

In theory, it's a cool idea. But, in the real world, there hasn't been much interest. This is the case even though Snocap has a distribution deal with MySpace.

Essentially, I think the big problem is Apple Inc.'s (NASDAQ: APPL) iTunes. Simply put, it sucks up most of the attention in the online music space.

And now, according to a post in Valleywag, it looks like Snocap is prepping for a sale. But in light of the mixed performance so far, I wouldn't expect a premium deal.

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