Thursday, January 18, 2007

Paperstand (TRB, EOP, HPQ, DELL, CCU, TELK)

The WSJ reports that at least 3 groups, including the Chandler family and a pairing of LA billionaires Ron Burkle and Eli Broad, submitted sharply varying proposals for Tribune (TRB) by last night's bid deadline, giving the co's board the difficult task of deciding how to proceed. None of the bidders is offering to pay a premium for all of Tribune. Even so, the board will likely come under pressure from shareholders to pursue some dramatic action.

According to the WSJ, a consortium of real-estate investors launched a competing $21.5bn offer for Equity Office Properties (EOP), hoping to knock off an existing $20.1bn deal with Blackstone Group. In this atmosphere, a topping bid that bests Blackstone's by some measures might have shocked real-estate experts a year ago. Today, it gets merely a shrug. "Honestly, I don't think anything can be too surprising anymore," said Michael Knott, of Green Street Advisors. "It just seems there's no limit to the prices being paid."
According to the WSJ General Electric (GE) last night was nearing a deal to purchase the diagnostics division of Abbott (ABT). Details of GE's plans couldn't be learned last night, and it is possible GE may be purchasing a large part but not all of the Abbott unit. Through last year's first 9 months, the division posted rev of about $2.9bn and an operating profit of approximately $300M.

The WSJ reports, citing 2 prominent research firms, that H-P (HPQ) increased its lead over Dell (DELL) in world-wide PC shipments in the 4Q. Gartner said H-P managed to increase its PC shipments by 24% in the 4Q. As a result, H-P's worldwide mkt share swelled to 17.4% from 15%. Gartner said Dell's global PC shipments in the 4Q slipped 8.7%, causing its mkt share to shrink to 13.9% from 16.4%. IDC said H-P's share increased to 18.1% in the 4Q from 15.9%. Dell's share slipped to 14.7% from 17.5%, IDC estd.

Barron’s Online reporting that the $26bn LBO of Clear Channel (CCU) appears to be running into resistance from some institutional shareholders, which could dim chances for shareholder approval of the huge media deal. The deal faces a high hurdle b/c 2/3 of the co's shareholders need to back the buyout for it to be approved. This means that holders who don't vote are effectively casting ballots against the deal. If 10% or 15% of holders don't vote, Clear Channel will need an enormous majority of the votes cast to get approval. As of Sept. 30, Fidelity Investments was Clear Channel's largest institutional shareholder, with an 11% stake, followed by Morgan Stanley at 7% and Capital Research at 5%. Other sizable shareholders include NWQ and Highfields Capital Mgmt. The Mays family, which runs Clear Channel, holds about 7% of the stock. Clear Channel shares moved up on Fri, after Bear Stearns' radio analyst, Victor Miller, put out a research note arguing that the buyout offer undervalued Clear Channel's radio business. In the note, Miller said that, instead of selling itself, Clear Channel should give shareholders the opportunity to swap their stock for shares in Clear Channel Outdoor (CCO). He also said that Clear Channel ought to sell about $2.5bn in assets and then do a large debt-financed share repurchase.

“Inside Scoop” section reports that Telik (TELK) shares imploded the day after Christmas on disappointing clinical trials results from its first drug, Telcyta, intended to treat cancer. The 70% loss prompted billionaire and activist shareholder Carl Icahn to nearly quadruple his stake in the co. Since Dec. 26, his investment vehicle Icahn Associates and affiliates have purchased 3.82M shares of Telik on the open mkt for nearly $18M. The group increased its stake to 5.2M shares, or 9.9%, of Telik's 52.4M outstanding shares.

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