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   Strategies & Market TrendsSpeculating in Takeover Targets

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From: Brasco One12/10/2010 2:52:38 PM
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To: richardred who wrote (2499)12/10/2010 3:10:46 PM
From: richardred
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Sold -IDT-No takeover (spin-off)sold today at 28.76 for a ST ballpark gain of just over a 100% :+ )

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From: richardred12/11/2010 1:57:38 AM
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Rackspace Jumps On Takeover Rumors

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From: richardred12/11/2010 2:10:04 AM
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Deals of the Day: Community Health Makes $3.3 Billion Bid for Tenet

By Stephen Grocer

Deals of the Day gathers all the biggest news of the morning related to mergers and acquisitions, bankruptcies, financing and private equity. Deal Journal’s homepage is You can see real-time updates of our posts and our favorite deal-related articles on other Web sites through our Twitter feed at
Mergers & Acquisitions

Occidental Petroleum: The company agreed to buy oil-and-gas properties in Texas and North Dakota for $3.2 billion, following on a deal to sell its Argentina unit to Sinopec. [WSJ]

Tenet: Hospital chain Community Health Systems made a $3.3 billion unsolicited offer for smaller rival Tenet Healthcare. [WSJ]

Beckman Coulter: The maker of diagnostic instruments used in clinical testing has put itself on the block and could fetch more than $5 billion in a sale. [WSJ]

Dell: Michael Dell should try his hand at Texas Hold ‘Em. He clearly has the nerve to call a bluff. [WSJ]

Diageo: The company is in early-stage talks to buy Mey Icki, a deal that would value the Turkish spirits company at between $2 billion and $2.5 billion. [WSJ]

Atkins Nutritional: The company behind the low-carbohydrate Atkins diet that has drawn both devotees and derision, is being sold to private-equity firm Roark Capital Group. [WSJ]

Areva: Kuwait’s sovereign wealth fund has offered to invest €600 million ($794.6 million) in French state-controlled nuclear engineering firm Areva SA for a 4.8% stake in the company. [WSJ]

Much controversy accompanied the Fed’s approval of a new bond-buying program to lower long-term interest rates, but six weeks later, its effects appear only modestly helpful—and potentially fleeting. [WSJ]

Cash hoard: U.S. companies held $1.93 trillion in cash and short-term assets at the end of the third quarter, or 7.4% of total assets. That’s the highest level in more than 50 years. [WSJ]
Insider Trading

Expert network: An investment bank’s pioneering “expert network” business linking doctors to hedge funds could shut down next year amid heightened government scrutiny of the industry, according to a firm executive. [WSJ]
Financial Institutions

Goldman: A Goldman executive told traders working for him in 2007 to “start killing the shorts in the street” and “cause maximum pain,” according to emails released by a Senate committee. [WSJ]
Related: Former Goldman Sachs programmer Sergey Aleynikov copied coding from Goldman’s high-frequency trading program, but allegations that he planned to use the code to build a competing system are “bogus,” his lawyer said Thursday. Prosecutors disagreed. [WSJ]

Bank of America: The bank restarted about 16,000 foreclosure cases across the U.S. on Monday, but it may be weeks before it is known whether the bank’s submission of new documents will pass muster with local judges. [WSJ]

Carlyle: The PE giant is in the midst of one of the biggest deal splurges in its 23-year history. [WSJ]
People & Players

Peter Orzag: Citigroup plans to announce as early as this afternoon that it is hiring former White House budget director Peter Orszag as a senior banker in its institutional securities business. [WSJ]

Samir Assaf: The HSBC named a 23-year capital-markets veteran as chief executive of its global banking and markets. He replaces Stuart Gulliver, the bank’s incoming CEO. [WSJ]

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To: richardred who wrote (2410)12/11/2010 2:12:43 AM
From: richardred
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WSJ M&A 101: The Origins of the Takeover Wars

In prior posts, I described the purposes of the provisions in a merger agreement—where the boards of directors of both companies have agreed to the deal. In this post I summarize the essence of what makes a deal hostile—the powers and duties of a board.

A uniquely American M&A fixture – the “poison pill” –- allows U.S. directors to block their company from being taken over. In many other countries, if a bidder can thread its way through Byzantine takeover regulations, a target generally can’t block shareholders from having the final up or down vote on a sale. In the U.S., the “poison pill” gives the power to most U.S. boards to do just that. Of course, shareholders can eventually throw the board out, but that can take two years for companies with “staggered boards.” And many buyers aren’t prepared to stand by that long.

Here’s how poison pills work: By imposing draconian penalties on prospective buyers, a pill effectively prohibits a bidder from crossing a particular ownership threshold—frequently 15% of the outstanding shares—without board approval.

But a big test of the poison pill is pending in Delaware, where the Chancery Court is close to a ruling in the Air Products/Airgas takeover battle. The heart of the case is whether the Airgas poison pill should be yanked. Because Air Products has said it will not stick around for another year to deal with Airgas’ staggered board, the court decision will be a make or break issue for this takeover.

Bloomberg News
An Air Products hydrogen fueling station in Allentown, Pa.

The poison pill is a relative M&A newcomer. My firm (and the SEC) argued in a seminal 1985 case before the Delaware Supreme Court that poison pills were illegal. We lost.

My firm had long taken the position that the “pill” unlawfully usurped each shareholder’s right to decide whether to sell his shares and the price he would accept. We advised clients not to adopt poison pills because we did not think they were legal.

The court decided that the adoption of a pill was a proper exercise of board authority. The key time for judicial intervention, the court said, would be if directors used a pill in violation of their fiduciary duties. Our firm immediately began helping clients implement pills, which are officially called by the more palatable name “shareholder rights plans.”


So to really understand the uniqueness of hostile deals, you need to understand the nature of board duties by which the board will be judged when they try to use a pill to stop a tender offer dead in its tracks—as Airgas has been trying to do to the Air Products offer.

Two factors give directors a lot of power. First, independent directors have almost no exposure to monetary damages for making a bad decision on takeovers. The only exception to this is if they breach their “duty of loyalty”—meaning they are acting in a way that is not loyal to the company, such as personally profiting from a decision.

Delaware directors have virtually no exposure to monetary liability for a violation of their “duty of care.” As a result, takeover cases are all about getting a judge to issue an injunction to stop a target board from using a poison pill (or other defensive tactic) to prevent a tender offer from being successful.

Second, even in injunction actions, target boards have one other “get out of jail free card” in their arsenal of defending their duty of care: the “business judgment rule.” The business judgment rule is a rebuttable presumption that directors act on an informed basis, in good faith and in the honest belief that they are acting in the best interests of the corporation. And, when it applies, a judge will not second-guess the business decisions of a director.

But with so much at stake in takeover cases, and the obvious possibility for abuse by a board that might consciously or unconsciously want to entrench itself, Delaware courts have layered two limitations top of the business judgment rule.

First, the Delaware Supreme Court developed the “Unocal” standard of enhanced scrutiny. Under that rule, the business judgment rule does not apply to defensive actions in a takeover unless the directors can demonstrate they had reasonable grounds to believe that the takeover is a threat to the corporation and that their response (e.g. failing to redeem a pill) was a reasonable response to that threat. The rule is still is very deferential to board decisions.

Then the court developed “Revlon” duties. These duties require a board to try to get the highest price possible—but only AFTER the board has decided to sell the company. This is one of the reasons that you very rarely see a corporate board declaring that that the corporation is “for sale” even if it is clearly in the final gasp of a negotiation.

By deciding to sell the company, the directors undertake extensive new duties and potential judicial scrutiny. It is much better for directors (from their own perspective) not to make the final decision until they are ready to accept a definitive deal. In short, the Revlon duty does not require a board to sell the company—regardless of how high the price is–it only regulates conduct after that decision is made.

The bottom line is that directors have enormous authority to resist takeovers. Will there ever be a case in which a judge requires a board to redeem a poison pill just because shareholders want to accept a deal the board has rejected? Some think that Airgas/Air Products could answer that question.

My bet though is that the Delaware courts intentionally would like to keep that question unanswered, and instead continue to rely on directors, as long as they appear to be acting reasonably. So if you’re buying stock in a company because you think it is a takeover candidate—particularly one with a staggered board which limits the ability to replace the directors–you had better be sure you have confidence in the incumbent directors.

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To: richardred who wrote (2612)12/11/2010 2:45:31 AM
From: richardred
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Turing down a superior offer. What ever happened to fiduciary duty to shareholders?

Portec Rail rejects Sentinel Capital bid
Pittsburgh Business Times - by Malia Spencer
Date: Friday, December 10, 2010, 5:05pm EST

In a late Friday afternoon filing with the Security and Exchange Commission, Portec Rail Products said it was rejecting a second offer made by a New York private equity firm to purchase the company. Portec has been working on an acquisition deal with Green Tree-based L.B. Foster since February.

In a letter received Dec. 7, New York City-based Sentinel Capital Partners, a middle-market firm, told Portec it was interested in acquiring the outstanding shares of the company for $13 a share. In its first offer in August, Sentinel suggested $11.75 per share. Portec rejected that offer in part because it was so close to the existing $11.71 per share offer by L.B. Foster. Later that month, L.B. Foster raised its offer to $11.80 per share.

In rejecting this latest Sentinel offer, Portec’s board said it was too far along with the deal with L.B. Foster and, with this morning’s announcement of selling certain assets to Kopper’s Holdings Inc., any anti-trust issues with the Foster acquisition should be cleared.

The tender offer with L.B. Foster could close within the next two weeks and the merger by the end of the year, Portec said in the SEC filing. The board also noted the Sentinel proposal was non-binding and that company would have to perform due diligence, further drawing out the acquisition process.

Finally, the board noted there would be a $3.4 million termination fee to stop the L.B. Foster acquisition.

Read more: Portec Rail rejects Sentinel Capital bid | Pittsburgh Business Times

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From: richardred12/12/2010 11:10:50 PM
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Reckitt Benckiser to buy India's Paras Pharma

NEW YORK | Sun Dec 12, 2010 9:59pm EST

NEW YORK (Reuters) - British consumer goods company Reckitt Benckiser (RB.L) said on Sunday it agreed to buy privately-held Indian firm Paras Pharmaceuticals for 32.6 billion rupees ($726 million).

Paras, which is expected to clock sales of more than 1 million rupees in 2010, makes several over-the-counter medications, including Moov pain relief ointment, Krack heel care lotion, and D'Cold cold remedy.

Private equity firm Actis, which owns 63 percent of Paras, and the firm's other shareholders have agreed to sell their stakes in the company. Paras' other shareholders include Sequoia Capital, Paras founder Girish Patel and his family.

In October, India's Business Standard newspaper reported that GlaxoSmithKline Plc (GSK.L), Sanofi-Aventis (SASY.PA), Novartis AG (NOVN.VX) and U.S.-based Johnson & Johnson (JNJ.N) had submitted concrete bids to acquire majority stake in Paras.

It reported that Japan's Taisho Pharmaceutical (4535.T) had also been expected to join the race.

Reckitt Benckiser was advised by JP Morgan (JPM.N) on the deal. Actis and the other Paras shareholders were advised by Morgan Stanley (MS.N).

(Reporting by Michael Erman; Editing by Anshuman Daga)

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To: richardred who wrote (2471)12/12/2010 11:15:19 PM
From: richardred
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GE to agree $1.2 billion takeover of oil firm Wellstream: report

On Sunday December 12, 2010, 7:12 pm EST

LONDON (Reuters) - General Electric (NYSE:GE - News) could unveil a 755 million pound-plus ($1.2 billion) takeover of British oilfield services company Wellstream Holdings (LSE:WSML.L - News) as early as Monday, the Financial Times said on Sunday.

The two sides would have come to an agreement on price in recent days, the FT said in an unsourced story on its website.

No one at Wellstream was available for comment on Sunday.

GE said in October Wellstream had rejected an approach it made which valued the company at 755 million pounds.

Wellstream makes flexible pipes used by oil companies in deep water, an area set for strong growth due to major finds in Brazil, where state-run oil firm Petrobras (Sao Paolo:PETR4.SA - News) accounted for around 60 percent of Wellstream's business in 2009.

Wellstream, whose main competitor in flexible pipe making is the French offshore engineering group Technip (Paris:TECF.PA - News), has been a frequent subject of takeover speculation.

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To: richardred who wrote (2575)12/12/2010 11:21:25 PM
From: richardred
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Microsoft Twitter Takeover Gossip Rises

A few years ago, Microsoft tried to buy Facebook from Mark Zuckerberg but ultimately, that was an unsuccessful attempt. This hasn’t stopped Microsoft and their CEO Steve Ballmer from looking and on Friday, Ballmer and his Twitter counterpart Dick Costolo were spotted having breakfast.

This of course has sparked a new round of gossip with a possible acquisition in the works or maybe another type of deal. Although the exact conversation that took place between these CEOs is unknown, neither companies were prepared to comment on the subject which just adds more fuel to the fire as to why the two met in the first place.

Microsoft has always been a fan of the micro-blogging site and has incorporated Twitter into the XBox 360 Dashboard as well as creating Twitter apps for its mobile platform Windows Phone 7 and also for the Zune HD music player. For now, Twitter is more an added feature into the various Microsoft platforms, but if an acquisition were to take place, it could pave the way to direct integration of the software which could then be used as the upper hand against its arch rival, Goggle Inc. as Google does index Twitter searches, but could potentially lose access to this functionality.

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To: richardred who wrote (2236)12/13/2010 10:37:11 AM
From: richardred
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Thermo Fisher to acquire Dionex

BOSTON (MarketWatch) -- Thermo Fisher Scientific Inc. /quotes/comstock/13*!tmo/quotes/nls/tmo (TMO 55.00, +1.96, +3.70%) on Monday said it plans to acquire Dionex Corp. /quotes/comstock/15*!dnex/quotes/nls/dnex (DNEX 118.25, +20.08, +20.45%) for $118.50 a share in cash in a $2.1 billion deal. The transaction is expected to close in the first quarter of 2011, the companies said.

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