Lone Star Steakhouse & Saloon Inc. (NDAQ:STAR) is facing pressure again from Barington and other shareholders who are demanding that the company take the time to revalue the company before any definitive transaction is announced. These shareholders have stated on multiple occasions that they believe the buyout premium put forth by a Dallas private equity group seeking to buy the company is simply not enough. The Board, however, has remained silent on the issue prompting Barington to send yet another letter (in a 13D/A filing today) in which they stated:

"We question the judgment of the Board in approving the transaction without having first obtained an appraisal of the real estate holdings of the Company. We estimate that the value of the Company’s extensive real estate assets (including land and buildings) exceeds $400 million and believe that it is misleading for the Company to disclose on page 28 of the Proxy Statement that the actual market value of the Company’s owned real estate holdings could be 'higher or lower' than such assets’ net book value of approximately $245 million. We also note that neither of the two financial advisors that opined as to the fairness of the proposed transaction made an independent appraisal or valuation of the Company’s real estate holdings or were furnished with an appraisal of such assets (as disclosed on pages 30 and 36 of the Proxy Statement), causing us to question the ultimate utility of the fairness opinions that have been rendered.

Furthermore, we question the thoroughness of the sale process, including the decision of the executive committee of the Board to only conduct a 'targeted' market check of six potential purchasers, as opposed to a more thorough assessment of interest from a broad range of potential financial and strategic buyers. We also question the effectiveness of this 'targeted' marketing process when the six potential purchasers were given less than a month’s time to review non-public information concerning the Company. It is our belief that it is unreasonable to expect a potential purchaser to complete its due diligence review of the Company in such a short time period ... It is therefore no surprise to us that once these potential purchasers had the sale process abruptly shut down on them in March 2006, none of them had an interest in further pursuing a transaction with the Company when contacted again in August 2006.

In light of the sale process that was conducted by the Board and the modest merger consideration being offered, please be advised that it is our intention to vote against the merger and that we may seek appraisal rights in connection with the transaction." (Read More)

This comes about a month after the hedge fund sent its first demands to the company back in September. So far, both Barington and Deutsche Bank have expressed their dissatisfaction with the company's sale process. Combined these two hold about 20% of the company's outstanding shares and they both plan to vote against the transaction unless their demands are met. If the two are able to convince other shareholders to vote similarly, it could put a significant road block in the way of STAR's planned merger.

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Evergreen Energy, Inc. (NYSE:EEE) reported wider than expected losses today in their 10Q filing with the SEC due to plant startup costs and higher operating expenses. The losses totaled $17.4 million (or $0.22 per share) compared to last years loss of only $4.9 million (or $0.07 per share). The company said it spent $17.2 million in plant startup costs (bringing the total spent to over $166 million of the years) and $31.3 million in capital expenditures in the nine months ended September 30, 2006. After all of this, its new fuel only generated $192,000 in income for the company. The company also announced that its deal with Arch Coal Inc. (NYSE:ACI) had expired. The stock is trading down 22% today after the company held its conference call.

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Banta Corporation (NYSE:BN) was facing its deadline to either accept or reject Cenveo's bid for the company last night when a new bidder suddenly jumped on the scene and purchased the company for $1.3 billion. RR Donnelley & Sons Co. and Banta announced the Board-approved merger at around midnight last night, not long after Cenveo had withdrawn its bid for the company. The buyout is valued at $52.50 per share, a 17% premium to Tuesday's closing price, and is expected to close in the first quarter of 2007.

All of this news comes after Banta had so adamently insisted that it was not for sale after rejecting several bids from Cenveo, including the latest one for $50 per share. For more history about the battle between Cenveo and Banta, see our prior articles. When Cenveo withdrew their offer last night, they included a letter to management:

"I am disappointed (but not surprised) that Banta has not accepted or even entered into discussions with us regarding our proposal to acquire Banta for $50 per share (or $34 per share if the acquisition is completed after the record date for your "special" dividend). Since you have had plenty of time to review our proposal and have not responded at all, Cenveo has no other choice but to withdraw its current and all prior proposals to acquire Banta... After you pay a dividend that no one wants and your stock price drops down to the twenties, you will understand what I have been trying to tell you all along -- Banta's senior leadership is not experienced and does not fully understand what is happening in the printing industry today. Your people just don't get it. Our management team's skill set of reducing expenses and delivering results over many years is the perfect solution for Banta's future success and your obligations to Banta's shareholders. Under its current leadership Banta is a ship floating on borrowed time that is about to sink."

The follow-on bid by RR Donnelley was almost a slap in the face for Cenveo, who could not understand why the company would not sell itself. Ofcourse now we know that it was because they had another buyer all along. But why was this deal kept so secret and inked overnight? Well, many believe that the company likely kept the bid secret to discourage Cenveo from making any possible counter-offers, which may have been difficult for RR Donnelley to match. While this may work out for management and employees, it is simply not in the best interest of shareholders who could have received a higher buyout price in the event of a bidding war. Regardless, it appears as if Banta's life as a seperate company is coming to an end.

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Berkshire Hathaway (NYSE:BRK) revealed yesterday in a 13F/A filing with the SEC afterhours that it had taken a 5.5% stake in Target Corp. (NYSE:TGT) with purchases dating back to June 30th. This news isn't particularly suprising given Buffet's investment in competitor Walmart; however, share in the retailer climbed over 1% today on the news as investors look to follow the Oracle of Omaha's lead. According to the filing, Buffet's average price was $50.30, which means he is already sitting on a nice 17% profit as shares near $60. Buffet is known for investing for the long-term in significantly undervalued companies, meaning that he is likely expecting much more upside. Investors should keep an eye on future SEC filings by Buffet, in particular Form 4s which indicate further purchasing of TGT shares.

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Merck & Co. Inc. (NYSE:MRK) agreed to buyout Sirna Therapeutics (NDAQ:RNAI) at a 100% premium yesterday in a transaction worth $1.1 billion. This acquisition is noteworthy because it is the first time that a large pharma player recognized RNAi technologies as a key technology. RNA interference (RNAi) technology selectively catalyze the destruction of the RNA transcribed in a single gene, allowing the drug to produce a highly specific, potent, and long-lasting effects to treat diseases much more effectively. Most notably is its potential for treating cancer, which is the reason Merck gave for the buyout.

This acquisition helped boost other RNAi players, like Alnylam Pharmaceuticals Inc. (NDAQ:ALNY), which rose 20% in today's trading, and Nastech Pharmaceutical (NDAQ:NSTK), which rose 5% today. If other larger pharma players take interest in the RNAi technologies, these two companies would be likely acquisition targets, which makes them stocks worth keeping an eye on!

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Marsh & McLennan Companies, Inc. (NYSE:MMC) has found itself engulfed a whirlwind of M&A activity as yet another buyer has surfaced that is interested one of its divisions. This time the Sunday Times has reported that founder Jules Kroll is interested in buying back Kroll Inc. for $1.9 billion, a company which MMC purchased from Jules just two years ago.

The company has also been under pressure from shareholders to sell off its Putnam Investments division, which has been the subject of many acquisition offers and partnership requests. Finally, the Sunday Times also reported a few weeks ago that the Willis Group had made an offer with backing from Kohlberg Kravis Roberts LLC, which was later rebuffed by MMC and said to be merely "conjecture and speculation" by the Willis Group. Combined, all of these factors are causing shareholders to consider the notion of breaking up the company, which could result in substantial premiums to the current market prices. This is definitely a stock worth keeping an eye on!

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Infocrossing, Inc. (NDAQ:IFOX) revealed in a 13D/A filing with the SEC today that RLR Capital Partners has upped its stake in the company to 6.2% from 5.1% in June of this year. The fund has averaged in at around $11 since that time as the stock rose to the high $12s, netting them a nice 14% profit so far. The company also said in their original 13D filing in June that they have other plans for the company:

"The Fund originally acquired Shares for investment in the ordinary course of business because the Reporting Persons believed that the Shares, when purchased, were substantially undervalued and represented an attractive investment opportunity. The Reporting Persons have communicated with management of the Issuer, and expect to continue to do so, regarding the Company's business and prospects. On June 15, 2006, the Reporting Persons sent a letter to the Issuer regarding the Reporting Persons' prior meetings with the Issuer and forthcoming value creating strategic and capital structure opportunities. A copy of the letter is attached hereto as Exhibit 1 and is incorporated herein by reference.

We believe that the coming months will offer Infocrossing the opportunity to explore value creating strategic and capital structure opportunities.  No other independent U.S. company in your industry  offers the range of service capabilities you provide. We are confident that you and your board will focus on the best available alternatives to capitalize on your very favorable industry positioning in order to enhance shareholder value." (Read More)

IFOX is currently trading at a discount to its enterprise value; however, it's PEG shows that it may be slightly overvalued if it cannot improve its growth in the coming quarters. However, with a hedge fund in the game to keep the company on track and mindful of shareholder concerns, this may turn out to be a stock worth watching. Any changes in capital structure or strategy could help the company cut costs and improve their bottom line.

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Rinker Group (NYSE:RIN) received a buyout offer for $11.7 billion (or about $65 per share) in cash from Cemex (NYSE:CX) on Friday that it today called "highly conditional" and one that "materially undervalues the company". With the stock currently trading above $71, investors are clearly looking for more too.

According to the SC 14D9 filing with the SEC:

"On Friday 27 October 2006, Cemex S.A.B. de C.V. (“Cemex”) announced that it intends to make a cash takeover offer for Rinker Group Limited (Rinker) at US$13.00 per share, equivalent to A$17.00 per share (based on an average exchange rate of A$1.00 to US$0.7645). A copy of that announcement was sent to Rinker by Cemex and is attached.

Rinker Chairman John Morschel said the Cemex announcement indicates that the unsolicited, hostile offer will be highly conditional.

'The preliminary view of the Rinker Board is that the proposed offer is opportunistic and materially undervalues the company,' he said.

Mr Morschel said Rinker’s performance of 40% compound annual growth in earnings per share over the past five years, together with strong growth in revenue (19% p.a. compound) and earnings before interest and tax (33% p.a. compound), has made it one of the best performing construction materials companies in the world.

'Directors will keep shareholders fully informed of further developments and will provide a formal recommendation on the offer in ample time for shareholders to make an informed decision,' he said.

'Shareholders should take no action in relation to Cemex’s offer at this time or any document received from Cemex until they receive the directors’ formal recommendation.'

Rinker has retained UBS as its financial adviser in relation to the proposed offer." (Read More)

This stock is definitely one to keep an eye on as both management and investors are looking for a better offer. It is not uncommon in these situations for the bidder to raise the bid one or more times to satisfy at least one of the two groups.

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Energy Partners, Ltd. (NYSE:EPL) provided an update on its search for strategic alternatives in an 8K filing with the SEC today. In an attached press release, Chairman and CEO Bachmann said:

"We are committed to continuing our process of exploring all options to maximize stockholder value, including a possible sale of the Company. A number of parties have already signed or have agreed to sign confidentiality agreements, and we are entertaining interest from others. Woodside's ultimatum and disingenuous rhetoric will not deter our Board of Directors from pursuing the best interests of all EPL stockholders.

"Woodside's self-serving behavior is very disappointing. We have not heard a word from them since our Board announced its process to explore strategic alternatives on October 12, 2006, and they have not sought to participate in this process, as many other companies are doing. In addition, Woodside has backtracked on its promise to pass through to EPL stockholders the savings from a reduced Stone termination fee, effectively reducing its original offer." (Read More)

If the company can successfully find another buyer, it could mean a significant premium to today's prices. With "a number of parties" having already signed confidentiality agreements, this buyout possibility may have some merit. This makes EPL a stock definitely worth watching as the company continues to explore its options.

Cheniere Energy Inc. (AMEX:LNG) revealed today in a 13D filing with the SEC that SRM Global Master Fund had taken a 6.5% stake in the company. The filing said that the fund would review their investment on a continuing basis and may engage in discussions with management concerning the business and future plans. The real story here is in SRM Global, however.

SRM Global is a relatively new hedge fund, launched by Jon Wood - who brought in over $2.4 billion for UBS in six years before launching his own fund. This new hedge fund focuses on trading shares of organizations that are merging, capital structure arbitrage (price difference between related corporate securities), and investment in industries and stocks that are not doing so well or are in trouble. Given his incredible track record, any investment by SRM Global makes this stock definitely one worth watching.

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