Ampex Corporation (NDAQ:AMPX) shareholders applauded management's move to retain the company's assets after a buyout offer from ValueVest High Concentration Master Fund. We covered this unofficial buyout offer in a previous article on November 14th, where we stated that ValueVest intended to discuss this matter with management at the next annual meeting. The company responded sooner, however, stating that they are not interested in a buyout but are willing to discuss other possible ways to increase shareholder value.

In a 13D/A filing yesterday, ValueVest said:

"On November 14, 2006, the Investment Manager received by facsimile a letter dated November 6, 2006 from the chairman and chief executive officer of the Issuer. The letter confirmed that the Investment Manager's letters of September 13 and 21, 2006 had been discussed by the Issuer's board of directors at their meeting in early November and that the Issuer's board of directors had concluded after that discussion that it would not be in the best interest of the Issuer or its shareholders to offer the Issuer's Data Systems business for sale at this time.

On November 15, 2006 the Investment Manager contacted the Issuer's chief financial officer by telephone and once again offered to meet with representatives of the Issuer to discuss the ways in which the Investment Manager might be able to help increase shareholder value and the commercial utilization of the Issuer's intellectual property assets. The chief financial officer agreed to meet with Messrs. Bakar and Cariani at the Issuer's offices in New York in the next week." (Read More)

The stock is trading up over 2% today on the news. Certainly, any licensing deals involving the company's intellectual property rights could entail further improvement in the company's bottom line. This remains a good stock to watch as the the fund meets with managment in New York next week to discuss possible ways to unlock shareholder value.

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U.S. Steel Corp. (NYSE:X) moved higher today by over 9% after a Bloomberg report said that Russia's biggest steel maker, OAO Severstal, is in talks with investment bankers to merge with local iron miners to create a $20 billion company, all in an effort to bid for the $8 billion U.S. Steel. The two potential local acquisitions are said to include ZAO Gazmetall and ZAO Metalloinves, which are controlled by billionaire Alisher Usmanov. The rumors stemmed from the Russian newspaper Kommersant, which quoted anonymous analysts at investment banks reporting that Severstal owner Alexei Mordashov is interested in buying U.S. Steel. This rumor is also supported by strong existing consolidation within the steel industry - particularly, the Mittal takeover of Arcelor which formed the world's largest steel company earlier this year. Finally, a spokesman for U.S. Steel didn't dismiss the rumor, saying: "We favor consolidation if it builds value for our shareholders, but we don't discuss any actions we may or may not be taking until the appropriate time." The rumor also helped other steel stocks climb sharply in morning trading. Combined, these factors make such an acquisition a possibility; however, there is still a lot of obstacles in the way. Regardless, this is definitely a stock to keep an eye on as the picture clears up in coming months.

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NYMEX Holdings, Inc. (NYSE:NMX) skyrocketed at open today as one of the hottest IPOs this year began trading. The company priced above its already-raised expected range last night at $59 per share, but this proved to be far less than investors were willing to pay as the stock rocketed over 100% in morning trading to over $140 a share. Many investors are driven to buy Nymex after seeing red hot performance and M&A activity amongst other exchanges: The NYSE IPO'd not long ago and performed extremely well; the LSE was the subject of a bidding war; the CME and CBOT were involved in a merger/buyout; and the NASDAQ has been red hot since it went public. Here's a chart showing three of the largest exchanges that have clearly outperformed the market during the past few years:



Investors appear confident that the Nymex will perform similarly, and some are even speculating the Nymex could be the subject of a buyout as consolidation within the industry continues. This stock is definitely one to watch as exchanges continue to outperform the rest of the market.

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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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