bloggingbuyouts

Almost everyone thought of the Penn National Gaming Inc. (NASDAQ: PENN) private equity LBO merger as dead money for quite some time. It only officially became a dead merger this morning. This was the last of the big multi-billion deals still officially on the books that was put together back before we had a full blown credit crunch.

PNG Acquisition Company Inc. was the buyout entity, which was indirectly owned by certain funds managed by affiliates of Fortress Investment Group LLC (NYSE: FIG) and Centerbridge Partners, L.P.

The buyout price of $67.00 per share was older than Methusela. Since January, this stock slid steadily from over $60.00 down to under $30.00. The deal was a known to be dead by everyone. But there is actually a silver lining here for the company. Penn National will get $1.475 Billion in cash out of this.

Affiliates of Fortress, affiliates of Centerbridge, affiliates of Wachovia, and affiliates of Deutsche Bank will all be holders of those notes. To top it off, Fortress Investment Group's Chairman & CEO, Wesley Edens, will join the Penn National Gaming Board of Directors.

Keep reading for on the fly analysis, guidance, and ramifications at 247wallst.com.

If you look at the trading of stock and options in Anheuser-Busch Companies Inc. (NYSE: BUD), you might think that a merger offer of some sort is going to be announced soon. This morning Reuters ran a piece about how Belgium's InBev is putting pressure on non-family shareholders to consider a $46 billion merger or risk being left in the cold in the global beer consolidation.

The article points to a $65.00 per share bid, although no formal offer has been made to the company, at least not publicly. The real winner here would be Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK/A, BRK/B) as his last holdings date shows Mr. Buffett holding more than 227 million shares with a current value of some $13 billion.

But if you look at trading over the last few hours, it seems that things are picking up on the bias of traders toward a deal being at least offered. The share volume is now almost 5 million shares, and the average daily volume is only 5.7 million shares.

If you want to read a quick on the fly options analysis, you can continue reading that full option analysis at Volume Spike (Vsinvestor.com). The volume spike was significant and impossible to ignore. Until word comes from either side, we'll chalk this up to speculation or rumors.

BCE, Inc. (NYSE: BCE) is one of the large multi-billion dollar pending mergers that is on hold and is caught in the middle of a fight. Its merger has been on the books for nearly a year but its ultimate fate is not yet know. Because of all the speculation in this and with a legal fight currently underway, this one is uncertain.

We have seen leveraged trading in the stock options activity today that threw up a big giant red flag. More than 20,000 options contracts traded today that looks like a straddle play in the June options.

You can read the full story at Volume Spike (VSinvestor.com) to see in-depth options analysis, where we think this stock has to go, and more detailed data on the BCE, Inc. legal fight.

Right after the close, Hewlett-Packard Co. (NYSE: HPQ) did actually confirm in a press release that the company was in advanced acquisition talks with IT-sourcing giant Electronic Data Systems Corporation (NYSE: EDS). While it noted that there are no assurances that a deal will be reached, Wall Street took it in good stride.

As traders look to the news covering whether or not EDS will become part of H-P, traders were looking at how to get in the news. As a result, there are many other tech and IT-sourcing companies to look at that other potential players may take an interest in.

If we took the mid-point of the pricing at $12.5 Billion we would have a rough share price of $25.00 per share on EDS. At that rough price, you would have a company that analysts expect to be priced at 18.2 times DEC-2008 earnings and 0.55-times revenue estimates.

Read the full story of "Who Could Be Next" at 247WallSt.com to see which other stocks in IT-outsourcing stocks could be in play.

According to a report from the Ernst & Young's quarterly US IPO Pipeline Report, IPO activity is flattening as companies are waiting and watching to market to make their move. While that observation is obvious as a heart attack, there are some rather good details that may lead to help determine good IPO's versus bad IPO's in that report.

In the first quarter of 2008, 90 IPOs sat in the pipeline, the same amount as the last quarter of 2007. New registration was stable across the quarters, but the slide is still downward sequentially. In January there were 10 while February and March saw only 6 and 7, respectively. While the amount the registrations represent grew this quarter compared to last, $16.8 billion up to $17.3 billion, the numbers slowed toward the end of the quarter. It seems pre-IPO companies are holding tight and watching the market.

As expected, first quarter 2008 weakened compared to the first quarter in 2007. In the first quarter of 2007, 103 deals waited in the pipeline compared to 90 in 2008. In 2007, the registrants represented $22.8 billion compared to $17.3 billion in 2007. The average deal size also dropped, down to $192 million from $221 million. The largest deal in 2007, The Blackstone Group L.P. (NYSE: BX) reached $4.0 billion while in first quarter 2008, the largest was American Water Works at $1.6 billion. Visa Inc. (NYSE:V) was left off because of an end of quarter and for size issues as 'one of a kind.' Companies are also sitting in the pipeline much longer, 163 days on average compared to 113 in 2007.

Technology takes up the bulk of the pipeline with 26 registrants and $3.3 billion in dollar amount, up from $2.8 in fourth quarter 2007. Technology attracts foreign issuers with four out of five foreign issuers in the technology sector. While technology went up first quarter 2008, oil and gas dropped 60% from $5.3 billion fourth quarter 2007 to $1.9 billion. Biotech accounts for a solid 12 registrants and pharmaceuticals tally 11. California leads on a state-to-state basis, filing 16.7% of the total filings at 15. Texas and New York followed with 11 and 8, respectively.

Also according to the report... Patience and confidence are likely to ebb by June, but if you're a good company with solid business plans, practices and proven results, opportunities still await you in the markets.

Liberty Mutual has agreed to acquire Safeco Corp. (NYSE: SAF) for some $6.12 billion this morning. Liberty offered to purchase all outstanding common shares at $68.24 per share, representing roughly a 50% premium to the closing price on Tuesday.

Safeco sells $5.9 billion worth of insurance policies annually, compared to Liberty Mutual selling some $20 billion annually. The deal will create the country's fifth largest property insurer with a combined 15,000 independent agencies. Safeco will join Liberty Mutual's Agency Markets business unit.

The boards of both companies have approved the merger and the deal is expected to close by the end of the third quarter upon regulatory and shareholder approval.

Continue reading on 247WallSt.com.

When you read of a $54 billion project, the first thing that comes to mind are things the size of the Suez Canal, the Panama Canal, or the massive Three Gorges Dam in China.

As it turns out, it isn't. It's in Dubai, or is supposed to be. A massive eco-project in Dubai may be coming to fruition. A report out of Arabian Business is talking about an 82-square kilometer project that would border Downtown Burj Dubai to the north and Dubailand to the south. The project is called Mohammed bin Rashid Gardens, and is being developed by Dubai Properties, part of the state-owned conglomerate Dubai Holding.

Having just had family that returned from Dubai just last week, I thought they were nuts when they talked about a massive oasis that was miles after miles of green commercial, residential, tourist, and care centers being built on top of what is already being built in Dubai today.

While dates have not been given, I'd strongly encourage you to read about it and look at the flash demo of some of the plans to see the scope of this project. As if the building of Dubai into a super-city wasn't enough, and as if creating "The World" housing projects wasn't enough, this project seems like it would be larger than massive.

Whoever gets that water desalination pact to supply all the water for these kilometers after kilometers of green land in an otherwise extremely hot and arid desert is going to clean house.

If things continue at the pace they have, every millionaire and every billionaire in the world is going to have to have one office and two homes in the region to fill all of these new and planned structures up.

BCE Inc. (NYSE: BCE) closed at $36.50.

BCE, Canada's largest telecommunications company, announced on June 30, 2007, it agreed to be acquired by an investment arm of Ontario Teachers Pension Plan, Providence Partners and Madison Dearborn Partners for an announced deal price of $42.75 per share. The Federal Communications Commissions cleared the deal on Dec. 20.

BCE May option implied volatility of 47 is above its 26-week average of 33 according to Track Data, suggesting larger movement.

MA& Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

There is good news and bad news in a financing pact for Washington Mutual (NYSE: WM) that has been outlined this morning. It has outlined details of a financial aid or rescue finance package.

The company is raising a total of $7 billion via direct stock sales to an investment vehicle managed by TPG Capital, which includes other top institutional holders.

While this financing pact is great in that it provides needed liquidity, the share placement price is essentially at the low of the stock since the malaise began. The company has also slashed its dividend down to $0.01 and outlined details of its losses.

TPG as the anchor will buy $2 billion in newly issued securities. WaMu is issuing 176 million shares at $8.75 and 55,000 contingently convertible perpetual non-cumulative preferred stock at a purchase price and liquidation preference of $100,000.00 per share with an exercise price of $8.75 per share.

This financing package is more similar to an old fashioned rights offering that is at a deep discount and highly dilutive. You can read the full story from 247WallSt.com..

The news that Microsoft (NASDAQ: MSFT) would not raise its bid for Yahoo! (NASDAQ: YHOO) came as enough of a surprise that it made the front page of some papers. Microsoft managers "argue that Yahoo's recent roadshow failed to dazzle investors and nothing in its presentations will justify a higher price," according to The Wall Street Journal . For good reason. The projections were absurd, especially given current economic conditions.

Microsoft understands full well that it has Yahoo! in a corner and that there is no need to be generous. Yahoo!'s shares traded at $19 just two weeks before the buy-out letter. That means if it walks away, its stock could go down by a third. Its board is not going to stand by and be sued by large institutional shareholders.

Yahoo! has shopped itself aggressively to News Corp (NYSE: NWS) and Time Warner (NYSE: TWX). Given that Mr. Murdoch is known as a man who never saw a risk he did not like, the fact that he made no bid speaks volumes.

Story continued at 24/7 Wall St.

Clear Channel Communications Inc. (NYSE: CCU) is going on the offensive. Affiliates of Bain Capital and Thomas H. Lee are filing breach of contract suit against the banks in the buyout deal, and Clear Channel itself joined in the complaint.

The firms are filing suit against against Citigroup, Morgan Stanley, Credit Suisse, The Royal Bank of Scotland, Deutsche Bank and Wachovia.

Some of the allegations are that banks inserted poison provisions, pretext and misdirection, and even a re-cut of the deal as they faced $2.65 billion in losses (that figure according to WSJ).

This one may be a done deal for sure now. When buyers and sellers have to start suing lenders, it is not all that frequent that those providing the leverage get forced into it.

But on the flip side, those banks should have to pay severe business penalties via a break-up fee for backing away.

In what is likely to be a bit of a blockbuster, SEC Chairman Christopher Cox sent a letter to Swiss regulators indicating the Bear Stearns (NYSE: BSC) did not have to go the way of all flesh. According to The New York Post "the 'fate of Bear Stearns was a lack of confidence, not a lack of capital,' Cox, the head of the Securities and Exchange Commission, wrote in a five-page letter sent to a Swiss regulator."

That letter will lead angry Bear Stearns sharedholders, who watched the stock fall from over $30 near $2, to question why JP Morgan (NYSE: JPM) was able buy the brokerage at a deep discount with help from the Federal Reserve. The missive may encourage Congress and regulators to question whether the takeover of BSC involved foul play.

Read the rest of the story at 247 Wall St.

Yet again, there are rumors surrounding the proposed $20 billion buyout deal for Clear Channel Communications Inc (NYSE: CCU). Even with the recent moves from the Fed, the credit crunch seems to be in full force. As a result, bankers are not holding back on (re)negotiations.

On CNBC yesterday, Scott M. Sperling gave an interview. He's the co-president of Thomas H. Lee Partners, which is one of the private equity sponsors of the Clear Channel transaction (the other partner is Bain Capital).

His take on the deal? Well, as should be no surprise, he had no comment on the status. However, he is certainly nervous about the financial system. He talked about the problems with the default swap market and even commercial real estate.

Interestingly enough, he thinks the recession could last from 12 to 24 months. At the same time, he believes there will ultimately be some good deals for private equity operators.

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

We have seen more private equity mergers fail in recent months that you might wonder if the private equity sector will ever do any more large deals. No group of stocks looks as bad as the group of the recently failed private equity buyouts.

Some of the losses here may seem excessive compared to what would have been the buyout price, but that is the new private equity M&A world for you. Below you will see how wide these spreads would be if the old mergers magically reappeared, but don't hold your breath.

The freshly failed acquisition of 3Com Corp. (NASDAQ: COMS) by Bain Capital Partners LLC & Huawei was originally $5.30 cash, although the last ditch effort to please the CIFIUS watchdog via a unit sale would have resulted in a lower price. If that magically came back, you'd be looking at an 82% gain.

You can access this full article with more detailed explanations and would-be spreads. Other busted private equity buyouts discussed are as follows:

• The Alliance Data Systems Corp. (NYSE: ADS) buyout from The Blackstone Group, LP (NYSE: BX)
• SLM Corp. (NYSE: SLM), or Sallie Mae, and J.C. Flowers
• United Rentals Inc. (NYSE: URI) buyout from Cerberus

Clear Channel Communications Inc. (NYSE: CCU) from Thomas H. Lee Partners LP and Bain Capital is actually still a pending deal, although that is also addressed because of a wide arb-spread.

Maybe someone can create a Failed Merger ETF. They have an ETF for almost everything else.