bloggingbuyouts

Manor Care (NYSE: HCR) jumped over 10% in price last Wednesday, reports Glenn Rogers in Internet Wealth Builder, following the announcement that it had retained the services of J.P. Morgan to "in reviewing strategic financial and related business alternatives to enhance shareholder value.".

The analyst notes, "Such actions are seen as a signal that a company is positioning itself for a takeover, merger, or similar major move."

Indeed, Manor Care's CEO Paul Ormond said, "Manor Care continues to enjoy a very strong financial position with industry-leading health care operations. Consequently, we are well-positioned to consider taking advantage of currently attractive conditions in the financial markets. We are actively evaluating a full range of opportunities for further strengthening our strategic position and maximizing value for our shareholders."

Rogers adds, "The announcement was accompanied by the usual cautions that there is no guarantee anything will come out of all this but it is obvious that something is in the wind."

He notes that the health care sector appears to offer a number of good take-over candidates. Further, he adds, after the Manor Care announcement, Standard & Poor's analyst Jeffrey Englander raised his target on the stock by $5 to $69.

For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free daily website, TheStockAdvisors.com.

This is kind of funny. After firing two senior executives for engaging in secret negotiations with private equity firms, Dow Chemical (NYSE: DOW) may now be in play. Apparently all the media coverage of the scandal may have gotten some private equity firms to take a look at Dow and realize that it might be a good buyout candidate. Dow has downplayed the rumors saying that the company is not for sale. While its fair valuation and cash pile may make it an attractive acquisition candidate, its size (44 billion dollar market cap) and cyclical earnings may make it less interesting.

But here's my question: If the company does end up being taken private, will the fired executives be paid a finder's fee for being the spark that started the fire?

The board at Clear Channel Communications (NYSE:CCU)has been complaining about the 26 billion dollar to take the company private, and now Bain Capital and Thomas H. Lee Partners may be sweetening the deal. In a letter the directors, the suitors offered to let current shareholders retain a small stake in the company after it is taken private.

This process, known as a stub, is a good idea. If the company's board is right in saying that the 26 billion dollar offer isn't generous enough, the company's shareholder can profit from the success of the private company, If it turns out that the 26 billion dollars was too generous, the shareholders won't make any money from the stub. Fidelity Investments and several other significant shareholders had previously said they planned to vote against the deal. Perhaps the prospect of retaining a stake in the private company will change their minds.

In discussions with one of my colleagues we were analyzing various strategies that Google (NASDAQ: GOOG) might explore to increase revenue from something other than advertising ... and thought Monster Worldwide (NASDAQ: MNST) was one that we kept coming back too, that might be a good fit. They are the parent company of Monster.com and have a current Market Cap of $5.5 billion at yesterdays closing price of $42.50. So say Google was to fork over $6 billion of its monopoly money in an all-stock deal to get this done. Now they have a real business with real cash-flow and a strong brand that has a big international footprint - a monster footprint!

Yesterday, car parts company Magna International Inc. (NYSE: MGA) said it should be the winning bidder for DaimlerChrysler AG's (NYSE: DCX) Chrysler unit.

Magna's CEO, Frank Stronach, told the Globe and Mail: "It's a big sum we would allocate. [...] We would make a big commitment."

Magna is really not a very big company. It has a market cap of just over $8 billion. Its income last year was just over $22 billion. Daimler's market cap is $85 billion and Chrysler's revenue is almost 35% of its $200 billion in revenue.

The union members on Daimler's board do not want Chrysler sold to private equity interests, as they believe this would lead to a break-up of the company and tens of thousands of layoffs. Regardless, it is hard to imagine that Magna can manage a company so much larger than itself and its own business at the same time. If a merger with Chrysler fails, the job loss could be just as terrible.

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

So who do you believe about Dow Chemical (NYSE: DOW)? What is the truth? Do the people involved in the story even know, or do they each only have a piece of a complex puzzle?

Maybe some have larger pieces than others. Dow Chemical closed Thursday at $46.00 (up 2%). For one thing, I am of the mind that almost everything is in play. Most things do have a price. As a Dow shareholder, I would be upset if the company did not consider a lucrative offer.

I have written about Dow on several occasions and included it as one of my stock picks for 2007. My very astute colleagues have been following the company as well, including Georges Yared who penned Is Dow Chemical next?, discussing the possibility that it might be acquired. But Dow issued a press release as reported by Jonathan Berr that the Dow buyout isn't happening, and then yesterday Dow announced the firing of two senior executives, one a board member, energizing Tom Taulli to post Buyout fever run amuck at Dow Chemical, and Peter Cohan wrote Dow Chemical's rogue LBO negotiators which was followed by more commentary from Berr expressing his amazement in Dow buyout saga turns bizarre.

The details of this unusual intrigue, high-level firings and all, were laid out by the Wall Street Journal.

I think that Dow could easily be the target of a leveraged buyout. If I did not think the stock was bargain priced then I would not have bought it myself or recommended it to our readers.

I also think asking the company about a specific deal is silly.

Would you discuss a deal before it was done, unless you thought that gave you some advantage, or you were trying to create a bidding situation? If I was selling, I would want to play the role of a reluctant seller to get a premium price.

The firm was the result of a January 2006 spinoff from Cendant, and operates Century 21, Coldwell Banker, ERA, Sotheby's International Realty and Coldwell Banker Commercial.

The financing for the buyout includes the following:

Deal background:

Of course, a big reason for the deal was the deterioration in the residential real estate market. In fact, a significant amount of Realogy's business came from the tough markets in California and Florida. Moreover, all but one of Realogy's stock analysts had a price target on the stock below its current value.

Realogy's management was unsure when there would be a "bottom" in the residential real estate market. But they feared the downturn could be prolonged.

About 20 years ago, American business was running scared. The reason? Leveraged buyout (LBO) firms and corporate raiders, fueled by junk bonds, were storming corporate America. This feverish gate crashing peaked with the then-record $33 billion LBO of RJR Nabisco, which Bryan Burrough described in his book, Barbarians at the Gate.

According to ABC News, the LBO crowd is back -- but with a new name and a much friendlier attitude to incumbent management. This Monday I was leading a discussion with my MBA students on whether the LBO wave of the 1980s was beneficial and how it compared to the current decade's wave. The beneficiaries back then were the LBO firms and the banks who financed the deals. The losers were the acquired companies' shareholders -- who got taken out at a slight premium -- and the companies' managers and employees -- whose lost jobs financed the debt used to do the deals.

When the LBO business collapsed in the wake of junk bond peddler Drexel Burnham's bankruptcy, the anti-LBO backlash was furious. America was outraged by LBO proponents' ostentatious displays of wealth and the layoffs they used to pay down the debt they took on to finance their hostile deals.