The Mills Corporation (NYSE:MLS) may be recapitalized with an additional $1.2 billion by Gazit-Globe Ltd, according to a 13D/A filing with the SEC. Many investors are concerned that the company may sell itself at its current prices, which are significantly lower than historical levels. This new recapitalization offer would allocate enough money for the company to rebuild itself and recover some of its lost value. Investors applauded the idea as the stock moved up 14% today on the news.

A letter filed with their 13D/A gave more details:

"Chaim Katzman, Gazit-Globe’s chairman, said his company’s goal is to recapitalize what it views as a struggling Mills Corporation, and that it is prepared to 'invest up to $1.2 billion into Mills' in accordance with the terms outlined in the Schedule 13D that Gazit has filed with the Securities and Exchange Commission [seen below].

'It is not a question of whether or not the board must take action to ensure the continuity of Mills in order to restore profitability and leadership in the industry,' said Katzman, 'but rather what kind of action is necessary and appropriate.'

'At this point it is clear to us that an outright sale of the company is not in the best interests of shareholders,' continued Katzman. “We’re urging the Mills’ board of directors in the strongest terms possible to consider our recapitalization proposal.'

'We believe Mills can and should be rebuilt, and not sold,' said Katzman, who added that his recent discussions with Mills leadership left him concerned that the company might elect to simply sell itself at a distressed price. 'We have helped build and rebuild companies over the years. We know how to take companies such as this and re-energize them so that maximum shareholder value is achieved.'" (Read More)

In an earlier filing, they detailed the capitalization amounts and other considerations:

"As you are aware, we are also a significant stockholder in the Company with an approximate 4.9% [now 9%] ownership interest. Due to our ownership position, we are not in a position at this stage in the process to execute the confidentiality agreement the Company has circulated as a precondition to obtaining material non-public information. Rather, we strongly encourage the Company to make all relevant financial and other information public as soon as possible so that we, and other potential bidders who may have similar issues to ours, may participate in the bidding process and enhance stockholder opportunities to achieve the best value for the Company.

Based upon our extensive review of the currently available public information, and, as discussed below, our in-depth property analysis, we are prepared to recapitalize the Company by investing new capital in the form of common stock. The cash amount would be up to $1.2 billion at a price per share of $24.50. This new common stock would be classified as Series B and would entitle Gazit to a majority of the seats on the Company’s board. The new common stock would also be convertible into the currently outstanding series of common stock. This new investment would be in addition to our current holdings of the Company's common stock." (Read More)

This is definitely a stock to keep an eye on as this situation unfolds. If Gazit-Globe is successful in recapitalizing the company and rebuilding shareholder value it could mean a significant return in the medium-term.

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USI Holdings Corporation (NDAQ:USIH) announced in an 8K filing with the SEC yesterday after the bell that they received a buyout offer from a private equity firm. The company gave no details as to the buyout price; however, they stated that they would review the offer. According to the associated press release:

"USI Holdings Corporation today announced that in response to an indication of interest received from a private equity firm in acquiring all of the outstanding common stock of the Company, the Board of Directors of the Company has formed a Special Committee consisting of outside directors to review the proposal and consider all of the Company's options. Lazard Frères & Co. LLC and Dewey Ballantine LLP have been engaged by the Special Committee to assist in its review. No assurance can be given that any transaction will be entered into or consummated." (Read More)

Investors pushed the stock up 7% in today's trading on the news. The company is currently undervalued, trading at a 20% discount to enterprise value with a PEG ratio of only 0.91. The company also has healthy profit margins and an excellent track record. This is definitely a stock to watch as the buyout premium cuold easily end up being higher than the 7% jump we've seen so far today.

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Clear Channel Communications, Inc. (NYSE:CCU)
Press Release by the Company
The company confirmed today that its Board of Directors is evaluating various strategic alternatives to enhance shareholder value. The company has retained Goldman, Sachs & Co. as its financial advisor in connection with its evaluations. The stock moved up 6% after-hours today on the news, despite the fact that the Company said it "does not intend to comment further publicly with respect to the exploration of strategic alternatives unless a specific transaction is approved by its Board."

ImClone Systems, Inc. (NDAQ:IMCL)
8K Filing by the Company
After two months of fighting, Carl Icahn has finally succeeded in taking over the company in a "bloodless coup", with the help of some nice severance packages. Investors applauded the new management as the stock rose over 5% in today's trading. Icahn said in a prepared statement: "My immediate priorities as chairman are to investigate the reasons why the relationship between ImClone Systems and its partner, Bristol-Myers Squibb, has seriously deteriorated over the past few years and to act expeditiously to find a qualified CEO with biotechnology experience."

Integral Systems, Inc. (NDAQ:ISYS)
8K Filing by the Company
According to the filing, "The Company’s efforts to date in connection with exploring strategic alternatives have focused principally on a possible sale of the Company. Because discussions with potential interested parties have to date not resulted in any proposal, agreement or transaction involving a sale of the Company, the Board of Directors of the Company has, after consultation with the Company’s outside financial advisors, decided to explore and evaluate other strategic alternatives to maximize stockholder value while continuing to explore and evaluate a possible sale of the Company."

Martha Stewart Living Omnimedia, Inc. (NYSE:MSO) moved higher today by 4% after CNBC mentioned that the company could become a private buyout target. Whether or not this rumor could be substanciated is the cause of much debate on the street. Many argue that by going private Martha Stewart would be able to again take a position as head of the company after being banned by the SEC after her insider trading fiasco. Moreover, the company is slowly beginning to improve their bottom line. However skeptics are quick to point out that there are many risks that still exist, and it would not be prudent for management to consider such a transaction while these remain on the table. Whether or not these rumors turn out to be true remains to be seen; however, this is a good stock to keep on the radar incase such a transaction ever materializes.

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The Gap, Inc. (NYSE:GPS) revealed today in a Form 4 filing with the SEC that Chairman Robert Fisher sold one million shares on October 19th and 20th at prices averaging $19.45. Although the majority of this sale was by trusts, Fisher did personally sell over 250,000 shares. This sale comes as Gap recently moved higher after it announced that it would launch on online shoe store to compete with Zappos.com, called Piperlime. Many insist that Piperlime does not have a chance at competing with Zappos or other online shoe stores, and will actually lose money as a result of their liberal shipping and return policies. Whether the sale of shares is simply a diversification move or a hint to future problems with Piperlime or other areas of the company remains to be seen.

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Douglas Emmett, Inc. (NYSE:DEI) began trading on the NYSE today after adding shares and pricing itself on the upper end of its $19 to $21 range. According to their S-11 filing with the SEC:

"We are one of the largest owners and operators of high-quality office and multifamily properties in Los Angeles County, California and have a growing presence in Honolulu, Hawaii. Our presence in Los Angeles and Honolulu is the result of a consistent and focused strategy of identifying submarkets that are supply constrained, have high barriers to entry and exhibit strong economic characteristics such as population and job growth and a diverse economic base. In our office portfolio, we focus primarily on owning and acquiring a substantial share of top-tier office properties within these submarkets and which are located near high-end executive housing and key lifestyle amenities. In our multifamily portfolio, we focus primarily on owning and acquiring select properties at premier locations within these same submarkets. We believe our strategy generally allows us to achieve higher than market-average rents and occupancy levels, while also creating operating efficiencies." (Read More)

This IPO comes as the REITs are seeing renewed strength in commercial real estate while the overall housing sector continues to suffer with purchasing slowdowns and higher interest rates. DEI is only the fourth company to raise over $1 billion this year through an IPO, following Mastercard, SAIC, and Warner Chilcott. This stock is definitely one to watch as the commercial real estate market continues to make inroads.

CSK Auto Corp. (NYSE:CAO)
13D/A Filing by Karsch Capital Management
Karsch announced today in an amended 13D filing that it wants the company to include in its proxy materials for the next annual meeting a proposal that the company immediately hire an investment banking firm to pursue a sale. This is the second letter that the fund has sent to the company containing such demands.

IntercontinentalExchange, Inc. (NYSE:ICE)
13D/A Filing by Goldman Sachs
Goldman Sachs revealed today that it is still actively selling its stake in IntercontinentalExchange along with Morgan Stanley. The two financial institutions were both initial partners with ICE (an OTC and Energy exchange) since its IPO in 2005.

NetManage, Inc. (NDAQ:NETM)
8K Filing by the Company
The company revealed in an 8K filing with the SEC today that their Board "has determined not to enter into negotiations with Riley Investment Management, LLC and Zeff Capital Partners, L.P., each a stockholder of NetManage, regarding their interest in acquiring all outstanding shares of NetManage common stock that they do not already own." The offer was for $5.25 per share in cash.

The Wall Street Journal reported today that Tribune Company (NYSE:TRB) has caught the eye of at least three private equity firms, and could begin receiving bids for the company this month. We first began reporting on this rumor back in September, when there was talk of a LBO in the future. According to the WSJ, Madison Dearborn Partners, Providence Equity Partners and Apollo Management make up one of the groups, while Thomas H. Lee Partners and Texas Pacific Group have combined to form another, citing sources with knowledge of the situation.

Since buyouts typically come at a significant premium to the prevailing market price, this stock may be worth watching. Moreover, the possibility of a bidding war between two groups of funds make it not only a safer bet that a buyout would go through, but also more likely that it would go through at a higher price. The stock is currently trading up around 2.5% on the news.

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Talk America (NDAQ:TALK) moved down 10% today after Sun Partners withdrew its $9 cash bid for the company (covered in a previous article). According to an 8K filing with the SEC:

"On October 23, 2006, Talk America Holdings, Inc. issued a release announcing that Sun Capital Securities Group, LLC (“Sun Capital”) had advised Talk America that it has determined, after extensive due diligence review and consideration, that it would not make a definitive offer to acquire Talk America at a price greater than the $8.10 price per share provided under Talk America’s September 22, 2006 merger agreement with Cavalier Telephone Corporation and, accordingly, that Sun Capital was withdrawing its earlier conditional proposal to acquire Talk America."

Currently the stock is trading at around $7.85 per share, which represents a 3% discount to the $8.10 offer, which is still likely to go through. However, some investors are now concerned that Sun Partners may have found a problem in their extensive review of the company that may jeapordize the $8.10 per share offer.

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Quipp, Inc. (NDAQ:QUIP) may soon find itself in hot water as hedge funds Henry Partners and Matthew Partners (9.4% owners) demanded that the company immediately put itself up for sale or institute other measures designed to help unlock shareholder value. The hedge funds made seven comments/demands, highlighted in a letter attached to a 13D filing made today:

"1. We believe the best strategic alternative is for Quipp to agree to be sold now to the highest bidder in an arms-length transaction. We believe that Quipp's shareholders should then have the opportunity to decide at a special meeting whether or not the agreed upon consideration is acceptable to them. For the record, we have no intention of being a bidder for Quipp.

2. We are strongly opposed to, and would not support, Quipp making any additional acquisitions. Our opposition to such a step is based on the consideration paid in the Newstec acquisition, and the subsequent poor results of that unit as disclosed in Quipp's quarterly filings.

3. We are also strongly opposed to Quipp parting with any more of its cash reserves, unless such cash is distributed, or otherwise returned, solely to Quipp's shareholders.

4. We are strongly opposed to, and would not support, any effort by Quipp to pursue a "going dark" process. We believe that any cost savings purportedly offered by such a step are far outweighed by the potential further loss of both public market value and transparency that "going dark" actions typically result in.

5. If, for whatever reason, Quipp is not sold to a third party in the near term, we believe that Quipp should continue for the time being as a publicly-traded entity, with management focused solely on managing the now-existing business for maximum profitability, rather than seeking further acquisitions.

6. In conjunction with Quipp continuing as a publicly-traded entity, we would expect a further reshaping of the membership of the Board of Directors such that more representatives of Quipp's major shareholders are offered the opportunity to serve on Quipp's Board in place of its current members, some of whom may wish to retire from the Board. As one of Quipp's largest shareholders, we would expect to participate in that process.

7. As a further part of Quipp continuing its public company status, we strongly believe the shareholder rights plan should be repealed and not reinstated without the prior approval of Quipp's shareholders, and that all Quipp directors be required to purchase in the open market, with their own funds, a realistic, yet meaningful quantity of Quipp shares so as to align more closely their thinking with that of the actual owners of the business." (Read More)

Investors have struggled with the company for several years, as it moved down from $16 in 2004 to its current range between $7 and $8 per share. If these hedge funds can succeed in putting the company up for sale, it could result in quick short-term gains. However, even if the company cannot be sold, if the funds are successful in instituting their own Board members, it could spell a turnaround for the company in the medium to long term. Board members are typically (essentially) chosen by the company's management, and therefore rarely enforce measures designed to help shareholders at the expense of management. With large investors holding seats on the Board, more measures could be instituted to unlock shareholder value and curb spending.

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