Clear Channel Communications, Inc. (NYSE:CCU) announced its acceptance today of a definitive merger agreement with Thomas H. Lee Partners and Bain Capital Partners. The $18.7 billion buyout is to take place at $36.70 per share pending shareholder approval - the company expects the transaction to be completed by the end of 2007. This news comes after the company announced that it had retained advisors to assist it in a possible sale of the company back on October 27th. In another announcement, the company revealed that it intends to sell 448 radio stations outside the top 100 markets, as well as its television division. However, it noted that the merger is not conditioned on the sale of these assets. Why are they doing this? According to the company:

"Our TV division and departing radio stations have consistently turned in industry-leading performance. However, these assets account for less than 10% of the Company’s revenues and earnings. Change is a necessary part of success. We are adapting our business model to accommodate the rapid and substantial changes in the markets in which we operate. These are difficult decisions, but we believe they are the right ones, and necessary for our future success." (Read More)

It also makes the buyout signficantly cheaper for the acquiring private equity firms; in fact, some investors are angered that the company waited until after the merger agreement to reveal this information in detail. If it had been the other way around, any upside from these sales could have benefited shareholders instead of private equity.

The company also addressed rumors regarding layoffs, stating:

"We do not expect this privatization to result in any significant reductions to our core workforce. While future employment is never guaranteed, reductions in force are typically associated with so-called strategic mergers in which two companies and their employees are combined, rather than with transactions that are more properly characterized as financial investments such as this one. The private equity group is making a very large investment in our company, and it is in their best interest for the company to continue having the right people with the right tools to grow and prosper." (Read More)

This buyout is the latest in a series of massive LBO transactions this year by private equity, including that of casino giant Harrahs Entertainment. The deal also affects investment banks, who stand to make more than $130 million on the deal in advising and legal fees. These institutions include Morgan Stanley, Goldman Sachs, and others who have benefited from the near-record $3 trillion in deals this year alone. Clear Channel stock is currently trading at $35.36 per share, roughly 6% below the buyout premium.

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Two of the largest IPOs of the year, KBR (NYSE:KBR) and Hertz (NYSE:HTZ), both opened higher today in an IPO market that has performed extremely well during the past few months. KBR is trading up 23% in afternoon trading, while HTZ is trading up marginally at $15.06 after pricing its IPO at the top of its range. It is worth noting that KBR was a subsidiary of Halliburton, who will retain an 81 - 83% stake in the company, depending on the the underwriters' over-allotment actions. These IPOs come ahead of the much-anticipated Nymex IPO tomorrow, which remains heavily oversubscribed despite a 20% price hike and half million additional shares.

FTD Group (NYSE:FTD) has hired Goldman Sachs (NYSE:GS) to help it explore a possible sale of the company, according to a report by Reuters. Although rumors of such a sale have surrounded the company for several months, sources are now saying that bids could be received as early as December. The stock is majority owned by Leonard Green & Partners, who took the company public roughly 19 months ago. Although the company has a significant amount of debt, they are trading below enterprise value with a low PE for its industry and have performed very well in the past eight months. This is definitely a stock to watch, as buyouts typically come at significant premiums to the current market prices. The stock moved up 5% in morning trading on the news.

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ServiceMaster (NYSE:SVM) may be attracting some private equity firms, according to an article in the Wall Street Journal. There is talk on the street that the $3.2 billion company's healthy cash flows combined with shareholder unrest may prompt private equity firms to take action or perhaps even lead to a management buyout. The only argument against the notion is the company's strong religious culture; however, that did not stop other bids for the company in the past that were rejected. Shareholders may be more likely to support a buyout now, however, as the company's performance has stalled while its brands and image remain intact. The company's policy is to not comment on rumors; however, the company's stock moved up over 6% in morning trading on the news. This is definitely a stock to keep an eye on in the coming weeks in case any further evidence comes out supporting such actions.

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Delta Air Lines (OTC:DARLQ) said today in a press release that it plans to emerge from bankruptcy as a standalone carrier. This announcement comes after U.S. Airways proposed $8 billion merger, which would create the world's largest carrier. Under the merger, Delta creditors would get $4 billion in cash and $4 billion in US Airways stock. US Airways believe the such a merger would provide approximately $1.65 billion in annual cost savings. Many are saying that although the merger might make sense, it would involve a lot of work to successfully integrate the two carriers. The complexity of the deal alone may cause it to fail - similar to the way AOL/Timewarner failed. Regardless, this is definitely a situation to watch as management reviews the proposal despite its bias to remain a standalone carrier. The stock moved up 14% on the news so far in today's trading.

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Pier 1 Imports (NYSE:PIR) confused investors today as the stock rose almost 23% on no news. The rise prompted the NYSE to notify the company of "unusual trading activity" and encourage them to issue a press release. The company subsequently said that its policy is to not comment on rumors or unusual trading activity. However, Reuters recently shed some light on the situation, reporting today that Jakup Jacobsen is preparing to make a bid for the entire company, citing sources close to the situation. On September 21st, we noted in an article on SECInvestor that Jacobsen had signed a confidentiality agreement and speculated that the two parties might pursue a buyout agreement. With a 9.8% stake in the company and detailed financials, this buyout remains a very distinct possibility. Combined, these factors make this stock definitely one worth keeping an eye on.

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ICOS Corp. (NDAQ:ICOS) is finding itself under increasing pressure after it struck a buyout agreement with Eli Lilly. HealthCor, the fund leading the fight against the takeover, sent yet another letter to management criticising their bidding process and imploring them to break off the agreement. There are several other holders that are also displeased with the agreement and have vowed to vote against the takeover.

According to this latest 13D/A communication:

"The proposed purchase of ICOS by Eli Lilly is not an arm’s length transaction. The acquisition has not occurred in a market-based, competitive bid process. Therefore, in making its determination of fair value, we believe the Board of Directors must rely upon market-based comparables of similar transactions. We have clearly shown, in our initial communication to you, the flaws and distortions that are contained within the 'Fairness Opinion' provided by Merrill Lynch. Without a competitive bid and without a 'Fairness Opinion' that can be relied upon, the Board of Directors of ICOS is 'flying blind' while trying to assess appropriate value.

Our analysis is based upon objective data sourced from independent investment analysts’ projections as well as from the information provided by the Company in its November 1, 2006 Proxy Statement. As set forth in the following table, since the announcement of the proposed merger with Eli Lilly, three additional transactions have been announced in the relevant healthcare universe. These transactions are all at premiums significantly higher than the premium in the Eli Lilly/ICOS transaction, as currently proposed. The Genentech, Inc. purchase of Tanox, Inc. is particularly important as there is an ongoing partnership on the target’s lead commercial product, Xolair. While ICOS’ management might believe that ICOS is a 'captive target' for Eli Lilly and therefore unable to generate a fair price, the existence of a partnership did not prohibit Tanox, Inc. or Genentech, Inc. from agreeing on a fair price." (Read More)

Table
Merck (NYSE: MRK) - Sirna Therapeutics Inc. (Nasdaq: RNAI) 101.6%
Abbott Laboratories (NYSE: ABT) - KOS Pharmaceuticals Inc. (Nasdaq: KOSP) 55.7%
Genentech Inc. (NYSE: DNA) - Tanox Inc. (Nasdaq: TNOX) 46.6%

Finding comparable transactions is a very common way of valuing a business and HealthCor has compiled this data along with a fundamental analysis of the company to come up with a value of "well in excess of" $40 per share. Meanwhile, the current buyout stands at just $32 per share. This stock is definitely one to keep an eye on as the voting date of December 19, 2006 draws closer.

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Ampex Corporation (NDAQ:AMPX) revealed in a 13D filing with the SEC yesterday that ValueVest High Concentration Master Fund had accumulated a 8.3% stake in the company. This transaction took place after several communications between management and the fund involving a possible buyout or sale of the company's intellectual property.

According to the filing, the fund is interested in:

"In a letter to the chief executive officer of the Issuer dated September 13, 2006, the Investment Manager once again confirmed the Master Fund's interest in acquiring or making a further equity investment in the Issuer. In that letter, the Investment Manager also indicated that it would like to discuss an alternative transaction in which the Master Fund would acquire the Issuer's Data Systems business and all of its intangible assets other than those patents which the Issuer was currently licensing or litigating and their related patent families. The Investment Manager indicated that it believed that this alternate asset transaction, which would not be subject to any financing contingency or condition, could be implemented relatively quickly and would give the Issuer the opportunity to realize immediate value for its shareholders and to generate further shareholder value through its ongoing patent licensing and litigation efforts." (Read More)

The company said they would discuss this matter with ValueVest after the next annual shareholders meeting; however, there is no indication that such a meeting took place yet. Obviously, any transaction involving a purchase of the company's intellectual property or company would come at a significant premium to the current market price. The company is trading below enterprise value, down over 40% on the year, as it recently swung to a profit in Q3. This is definitely a stock worth watching as the company prepares for an official proposal.

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James River Coal Company (NDAQ:JRCC) may see some volatility in its future and Pirate Capital continues to unload shares of the company, moving its stake from 14.1% to 8.8% according to their 13D/A filing with the SEC. This news comes after Pirate announced that its board member, Matthew Goldfarb, had resigned after the fund's shakeup and that the company's strategic alternatives review process had ended unsuccessfully. This series of blows could spell bad news for investors as hopes of a turnaround become more and more dim while even more shares are suddenly being dumped on the market. The stock has already moved down from $40 in 2006 to under $10 today, which means large losses already suffered by Pirate Capital and other shareholders who have been along for the ride. But is a turnaround still possible? Well, the company's latest financials indicated wider losses for Q3 reporting an operating loss that more than doubled year over year to $10.46 million, so any improvements in their bottom line remains to be seen.

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Nabi Biopharmaceuticals (NDAQ:NABI) announced today in a press release that it had reached an agreement with activist hedge fund Third Point to settle their indifferences. The hedge fund finally received word from the company after threatening a proxy battle to takeover the company's Board of Directors.

According to the press release:

"Under the terms of the Settlement Agreement, Nabi Biopharmaceuticals has appointed two Third Point nominees, Jason Aryeh, founder and general partner of JALAA Equities, LP and Tim Lynch, president and CEO of NeuroStat Pharmaceuticals, Inc., to the company's board of directors. In addition, Nabi Biopharmaceuticals will establish a strategic action committee (SAC) to continue the company's previously announced process of exploring strategic alternatives.

The SAC will work with the company's financial advisor, Banc of America Securities LLC, and management to evaluate a range of strategic transactions and initiatives and will have responsibility for recommending specific actions to the Nabi Biopharmaceuticals' board. As part of the settlement, Nabi Biopharmaceuticals has agreed to pay up to $250,000 of Third Point's expenses and Third Point has agreed that it will not commence a consent solicitation or a proxy contest prior to the company's 2007 annual meeting of shareholders."

The company's president and CEO Tom McLain added, "Through this agreement Nabi Biopharmaceuticals and Third Point will avoid a costly and disruptive consent solicitation at a time when the company is exploring a full range of strategic alternatives to enhance shareholder value. Our board and management team can also remain focused on serving our customers and executing our business plan as we continue to pursue the exciting opportunities that lie ahead for our company."

This is good news for NABI shareholders, who are now more likely to find themselves in a buyout situation in the future. NABI is definitely a stock to watch as this situation continues to progress.

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