ElkCorp (NYSE:ELK) was a company that we first covered in early November, when we reported that the company considered putting itself up for sale. Since then the company moved up more than 25% after it accepted an offer from The Carlyle Group at $38 per share, outbidding Building Materials Corporation of America's $35 bid.

Now, there are rumors that Building Materials Corporation may be contemplating higher bid. The group currently controls over 10% of the company's outstanding shares, giving them excellent leverage in any battle for the company. Meanwhile, shareholders have jumped the price up over 5% to $40.90 in today's trading, giving substance to the rumors. This is definitely a stock worth watching as this situation unfolds; however, it remains a risky investment right now, trading above the sole accepted offer.

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DRAXIS Health Inc. (NDAQ:DRAX) announced today that it received approval from the TSX to renew its Normal Course Issuer Bid. This enables the company to repurchase up to 3,397,011 of its common shares, which represents nearly 10% of its float. The company's board determined that the underlying value of the Company is not reflected in the current market price of its common shares and has thus concluded that the repurchase of common shares pursuant to the proposed normal course issuer bid presently constitutes an appropriate use of financial resources and would be in the best interest of shareholders.

Intersil Corporation (NDAQ:ISIL) approved a $400 million stock buyback program. This is significant because it represents around a 10% repurchased based on today's prices, given the company's market cap of just over $3.3 billion. The company noted that the funding for this repurchase would come from future free cash flows along with a portion of their cash on hand.

UST Inc. (NYSE:UST) announced that it would be increasing its dividend 5.3% and instituting a $200 million share buyback program. While the share buyback only represents approximately 2% of the company's market cap at current prices, the moves do illustrate management's confidence in the company's future cash flows and committment to increasing shareholder value. The stock moved up 2% on the news in intraday trading.

The Brink's Company (NYSE:BCO) is again in the news today as Pirate Capital makes a move on the company. In a 13D/A filing with the SEC, Pirate disclosed an 8.5% stake in the company and said that they intended to nominate two of its own people to the board of directors at the next shareholder election. Specifically, the filing stated:

"The Issuer has not responded to Pirate's request that Thomas R. Hudson Jr. immediately be appointed to the Issuer's Board of Directors other than to indicate that Mr. Hudson's nomination for election to the Board will be considered in due course. Pirate is now contemplating proposing two additional nominees for election at the upcoming annual meeting. In the event that Pirate proposes the additional nominees, Pirate intends to give notice of their nomination for election to the Board, along with the notice of Mr. Hudson's nomination, prior to the expiration of the time set for shareholder nominations in the Issuer's by-laws." (Read More)

This move comes shortly after MMI Investments came out in support of any activist investors that would institute change in the company. As we said before, the combined group now accounts for nearly 25% of the company's outstanding shares. With such a large stake, this coalition has a good chance of forcing the board of directors to at least consider the possibility of a sale in 2007.

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Redback Networks Inc. (NDAQ:RBAK) announced a definitive agreement to be acquired by Ericsson (NDAQ:ERIC) for $2.1 billion ($25/share).

Hydril (NDAQ:HYDL) expects its fourth quarter 2006 earnings to be around $1.05 per diluted share (above previous expectations) primarily due to improved premium connection segment results. The current consensus stands at $0.87.

Darden Restaurants (NYSE:DRI) reports Q2 EPS of $0.41, one cent better than estimates.  Revenues were $1.39 billion versus $1.4 billion consensus.  Olive Garden's second quarter sales of $662.1 million were 7.1% above the previous year. The company expects total sales growth of between five and six percents in fiscal 2007.

Harrah's Entertainment, Inc. (NYSE:HET) has entered into a definitive agreement for affiliates of Texas Pacific Group (TPG) and Apollo Management, L.P. to acquire Harrah's in an all-cash transaction valued at approximately $27.8 billion, including the assumption of approximately $10.7 billion of debt.  Under the terms of the agreement, Harrah's stockholders will receive $90.00 in cash for each outstanding Harrah's share.

Christopher & Banks (NYSE:CBK) reported Q3 EPS of $0.24, in-line with estimates. Revenues were $139.3 million verus $142.13 million consensus. For the fourth quarter, earnings are anticipated to be in the range of $0.13 to $0.14 per diluted share. The current Q4 EPS consensus stands at $0.18.  

Palm, Inc. (Nasdaq:PALM) reports Q2 EPS of $0.12 versus the consensus of $0.15. Revenues came in at $392.9 million versus the consensus of $392.3 million. They predict Q3 revenues to be around $400 to $410 million versus the consensus of $416.6 million.

PSS World Medical, Inc. (NASDAQ:PSSI) has revised its fiscal year 2007 financial guidance due to lower sales of influenza vaccine compared with previous expectations. The company revised its fiscal year 2007 earnings per share goal to $0.69 to $0.71 per diluted share. The company reiterated its goal of achieving $58 to 60 million of cash flow from operations for fiscal year 2007.The current FY07 EPS consensus stands at $0.78.

Endeavor Acquisition Corp. (AMEX:EDA) is higher this morning after announced a definitive merger agreement to acquire American Apparel Inc., a leading domestic vertically-integrated manufacturer and retailer of cotton fashion basics and the largest T-shirt manufacturer in the United States.  Endeavor will also assume up to $110 million of net debt outstanding, create a one-time merger bonus pool of $2.5 million, and reserve up to approximately 2.7 million shares of additional Endeavor stock under a plan to be made available for issuance to American Apparel employees.

Alliance Imaging, Inc. (NYSE:AIQ) announced its financial guidance for 2007.  Full year 2006 revenue is expected to range from $452.5 million to $455.5 million.  The current FY06 EPS consensus is $456.20 million. For FY07, the company expects revenue to range from $431 million to $443 million versus consensus of $460.34 million.

Circuit City Stores, Inc. (NYSE:CC) reported a Q3 loss of $0.09 versus the consensus for a profit of $0.07. Revenues were $3.1 billion versus a $3.12 billion consensus. The company foresees the net sales growth between 8% to 9%, down from 9% to 11%.  

Scholastic Corporation (NASDAQ:SCHL) reported Q2 EPS of $1.75, four cents better than estimates. Revenues were $735.5 million versus a $702.97 million consensus.  Scholasticed continues to expect fiscal 2007 revenue of $2.1 to $2.2 billion, earnings per diluted share of $1.55 to $1.85. The current FY07 revenue consensus is $2.15 billion and EPS is $1.69.

The Brink's Company (NYSE:BCO) may find itself in trouble soon as an increasing number of shareholders are taking an active role in changing the company. We first mentioned Brinks back in September of this year (when the stock was at $57 per share) when activist hedge fund Pirate Capital, an 8.5% holder of the company, expressed its opinions on the company's future direction. In a letter attached to a 13D filing at the time, Pirate said that the company would represent an excellent buyout candidate due to its market leadership, and could attract offers between $68 and $72 per share. Later, in November, Steel Partners (another major activist hedge fund) increased their stake from 5.5% to 8%. Now, MMI Investments added their support to the cause issuing the following letter in their recent 13D/A filing with the SEC:

"MMI Investments, L.P. is the owner of 4,008,000 shares of The Brink’s Company (“BCO”) or approximately 8.3% of the outstanding stock. We believe BCO’s brands, financial performance, market positions and management are among the best in its industry. We therefore remain extremely frustrated with its continued undervaluation relative to its operating success, its peers’ trading multiples and the value it might achieve from pursuing one of several potential strategic alternatives.

Another large stockholder has raised the question of BCO pursuing a strategic alternatives review and indicated that it intends to submit a stockholder proposal to that effect at BCO’s 2007 annual meeting of stockholders. As we understand the proposal described in their Schedule 13D amendment, we are in support of it. The reasons for our support are reflected in our presentation transmitted for filing with the SEC today, a copy of which is enclosed herein, which indicates that BCO has many attractive, value-enhancing strategic options including an LBO, sale to a strategic acquiror, tax-free split-up of the company, leveraged recapitalization or another significant stock repurchase. Details underlying these analyses are included in the presentation materials, but in summary we believe that BCO’s potential value from following one of these strategic alternatives is likely to be $70 or more per share. Moreover, we believe that because BCO has multiple options, more than one could be explored simultaneously which we believe makes the likelihood of success much greater.

For the reasons described in the accompanying presentation materials, we believe that, as with the BAX sale process last year, BCO’s stockholders’ interests could best be served by a formal review of strategic alternatives by a qualified investment banker, whose mandate would include an active canvassing of potential buyers and the debt and equity markets. As discussed therein, BCO’s valuation and operations are complex subjects which require explanation and study to appreciate fully. We believe that several factors obscure the value that potentially could be achieved by pursuing strategic alternatives, such as the expected significant increase in 2007 (and beyond) EBITDA, the future transference of the cash burden of the legacy liabilities from the company’s operations to the VEBA assets (which we believe will shortly be overfunded if not utilized soon) and the aggressive growth of BHS which hinders cash flow generation. We believe that an active canvassing of the market is essential in order that interested parties properly appreciate these factors in estimating BCO’s true value.

Further, we believe that given the current strength of the mergers and acquisitions market (as evidenced yesterday in the robust price paid for HSM Electronic), as well as the equity and credit markets, that BCO would be well advised to pursue its alternatives in the beginning of 2007. A costly and time-consuming proxy contest with such stockholder during the first half of 2007 unnecessarily risks missing this window of opportunity." (Read More)

Combined, these investors account for nearly 25% of the company's outstanding shares. With such a large stake, this coalition has a good chance of forcing the board of directors to at least consider the possibility of a sale in 2007. The stock is currently trading up more than 6.7% on the news, sitting at $64.23. The fundamental valuation of the company along with this coalition of activist shareholders bent on unlocking value make BCO a stock worth watching in the next couple of months.

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Biomet, Inc. (NDAQ:BMET) agreed to be acquired today for $44 per share by a private equity group consisting of members of the Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. and TPG. The $10.9 billion deal is expected to close on or prior to October 31, 2007.

We first mentioned this company back on November 2nd when there were rumors that Smith & Nephew (NYSE:SNN) was interested in the company. The stock was trading around $38 per share before rising around 15% to its current levels after receiving the current private equity offer at $44 per share. Now rumors have surfaced that Smith & Nephew may become a buyout target, with potential bids from companies like Zimmer (ZMH), Johnson & Johnson (JNJ), and Stryker (SYK). This makes SNN a stock to watch if the Biomet transaction does go through.

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CEMEX, S.A.B. de C.V. (NYSE:CX) expects Q4 revenue of $4.3 billion, an increase of 9% versus the same period a year ago; the current consensus is $4.21 billion. For the full year 2006, CEMEX expects to meet its guidance of $4.1 billion, an increase of 15% versus the same period last year.

Oracle Corporation (NDAQ:ORCL) reports Q2 EPS of $0.22, in line with estimates. Total revenues were $4.16 milion versus the $4.15 billion consensus.

Applied Signal Technology (NDAQ:APSG) reports Q4 EPS of $0.05 versus consensus of $0.22.  Revenues were $45.38 million versus $59.58 million consensus.

DynCorp International (NYSE:DCP) shares are trading higher after reports surfaced that the company has been awarded an Army contract worth as much as $4.6 billion.

ElkCorp (NYSE:ELK) announced it has entered into a definitive agreement to be acquired and taken private by global private equity firm The Carlyle Group in an all-cash transaction valued at approximately $1.0 billion, including the assumption of approximately $173 million of net debt. Under the terms of the agreement, ElkCorp shareholders will receive $38.00 in cash for each outstanding ElkCorp share. This represents a premium of approximately 51% over ElkCorp's closing share price on November 3, 2006. We discussed the possibility of this buyout in a previous article.

Joy Global Inc. (NDAQ:JOYG) reports Q4 EPS of $0.71, which was 5 cents better than estimates. Revenues were $689 million versus a $655.64 million consensus. Revenues over the coming 12-months are expected to be in the range of $2.70 to $3.00 billion, EPS is expected to be between $2.85 to $3.25. Current FY07 revenue consensus is $2.84 billion and EPS consensus is $2.95.

Matria Healthcare, Inc. (NDAQ:MATR) foresees FY07 EPS between $1.67 to $1.74 and revenues between $385 to $395 million, higher than the current FY07 EPS consensus of $1.36 and revenue consensus is $386.34 million.

Exelixis, Inc. (NDAQ:EXEL) and Bristol-Myers Squibb Company (NYSE:BMY) announced a worldwide collaboration today. Bristol-Myers Squibb will pay Exelixis an upfront payment of $60 million in cash. Exelixis will also receive $20 million for each of up to three different drug candidates selected by Bristol-Myers Squibb at IND.

Norsk Hydro (NYSE:NHY) and Statoil (NYSE:STO) have agreed to recommend to their shareholders a merger of Hydro's oil and gas activities with Statoil, creating the world's largest offshore operator with a strengthened platform for future growth.

Express Scripts, Inc. (NDAQ:ESRX) offered to acquire Caremark Rx, Inc. (NYSE:CMX) for $29.25 in cash and 0.426 shares of Express Scripts stock for each share of Caremark stock. The offer has a value of around $58.50 per Caremark share or approximately $26 billion in the total.

Oxigene Inc. (NDAQ:OXGN)
Form 4 Filing
Director Per-Olof Soderberg disclosed purchasing 65,800 shares at $4.94 in a transaction worth $325,052. This brings his total stake to 702,130 shares. The purchase comes as the stock has moved off of its highs of $5.70 to its current levels of $4.90.

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Form 4 Filing
CFO Steven Baughman disclosed purchasing 100,000 shares at prices ranging from $2.14 to $2.19, bringing his stake to 300,009 in a transaction worth around $215,000. This brings his total stake to 300,009 shares. The purchase moved the stock up over 6% today, adding to its existing ~44% gains on the year. The waste removal company stated recently that it was shedding low margin contracts in order to focus on better opportunities. Moreover, it said it was negotiating with the DoE and DoD to spread their waste removal operations more evenly throughout the year.

Wyndham Worldwide (NYSE:WYN) has increases its guidance for the 2006 total revenues from a range of $3.67 billion to $3.77 billion to a range of $3.79 billion to $3.84 billion.  Meanwhile, revenue consensus remains at $3.8 billion.

Isilon Systems, Inc. (NDAQ:ISLN) opened for trading this week, trading at $22.38 after pricing at $13 per share, above the expected $11 to $12 range which was raised from $8.50 to $9.50.

Affymax, Inc. (NDAQ:AFFY) IPO'd this week, trading at $30.40 after pricing 3.7 million shares at $25.00 per share, above the expected range of $22 to $24.

Zoltek Companies, Inc. (NDAQ:ZOLT) reported $92.4 million for 2006's net sales for the fiscal year, an increase of 67% from net sales of $55.4 million in fiscal 2005. Meanwhile, the current FY06 revenue consensus is $103.23 million.

Overstock.com, Inc. (NDAQ:OSTK) announced that institutional investors have agreed to purchase over 2.7 million shares of its common stock for $14.63 per share.

USA Truck, Inc. (NDAQ:USAK) announced that it sees full year 2006 fully diluted earnings per share of $1.08 to $1.12, versus the consensus of $1.25. Revenue, excluding fuel surcharges, is expected to be in a range of $378 million to $383 million, versus the consensus of $478.85 million.

ChipMOS Technologies, Ltd. (NDAQ:IMOS) raised its prior guidance for the fourth quarter ending December 31, 2006. The company now expects the revenue for the fourth quarter of 2006 to be in the range of US$176 million to US$181 million, compared to prior guidance of US$168 million to US$172 million.  

Illinois Tool Works Inc. (NYSE:ITW) announced that it would decrease its forecasted earnings range to $0.72 to $0.74 from the prior range of $0.77 to $0.81. As a result, the company's full-year forecasted earnings range is now $2.96 to $2.98 compared to the prior range of $3.01 to $3.05. Current Q4 EPS consensus is $0.78 while the FY EPS consensus is $3.02.

The Black & Decker Corporation (NYSE:BDK) announced that their net earnings per diluted share would be about $1.30 to $1.35 for the fourth quarter of 2006 and approximately $6.50 for the full year, compared to a consensus of $1.86 and $7.01, respectively. The company also noted that it expects to report a sales decline of approximately 8% for the quarter.

Weyerhaeuser Co. (NYSE:WY) moved higher the last few days after Franklin Mutual Advisers, a 7.6% holder in the company, increased its pressure on Weyerhaeuser to convert itself from a C-corp to a Real Estate Investment Trust (REIT). According to the hedge fund, the move would enable the company to avoid unnecessary double taxation along with a host of other disadvantages to running the company as a C corporation as opposed to a REIT. As a result, the company could save as much as $24 per share in value that would be lost between now and 2010.

Franklin submitted their full proposal today in a 13D/A filing with the SEC:

"Franklin Mutual Advisers (FMA) owns approximately 18 million shares of Weyerhaeuser stock and has been a 13-d filer on the company since April 2005. We acknowledge the positive steps the company has taken over this period to restructure the business, including the sale of the Fine Paper business that is scheduled to close during the first quarter of 2007.

However, FMA continues to believe that the share price of Weyerhaeuser reflects a substantial discount to the intrinsic value of its underlying assets and core businesses. While the restructuring actions taken to date have been rational and objective, we believe the management and board of directors of Weyerhaeuser must act with an increased sense of urgency and accelerate its efforts to enhance and crystallize this intrinsic value for the benefit of all shareholders.

These steps include (1) a corporate reorganization that will eliminate the tax disadvantages of owning timber properties in a C corporation and (2) accelerating the time frame for the planned restructuring of the containerboard business.

Despite the best efforts of the company and other similarly situated entities, it now appears that the tax law will continue to favor holding timber properties in entities such as Timber Investment Management Organizations (TIMOs) or Real Estate Investment Trusts (REITs). The structural disadvantages to Weyerhaeuser include the inability to competitively bid on timberlands undergoing a sale process, a higher weighted average cost of capital and the full double taxation of timberland generated earnings. According to a recent report from one major Wall Street analyst, by 2010 the current structure, as opposed to a REIT structure, would destroy an incremental $24 per share of shareholder value, or nearly 35% of today’s equity value. FMA strongly believes Weyerhaeuser must immediately take steps to eliminate this disadvantage, including possibly converting the current corporate structure to a REIT.

Many paper and forest product companies such as Rayonier, Potlatch, Georgia Pacific, International Paper and the former Boise Cascade have become more competitive, realized substantial operating benefits and experienced significant share price appreciation by either converting to a REIT or by selling their timberlands. For example, since becoming a REIT in January, 2004, Rayonier produced (according to Bloomberg) an annual equivalent return (including reinvestment of dividends) of 20.4% through 12/12/06. Potlatch has produced (according to Bloomberg) an annual equivalent return (including reinvestment of dividends) of 25.3% through 12/12/06 since becoming a REIT in January, 2006. In contrast, Weyerhaeuser has generated (according to Bloomberg) an annual equivalent return (including reinvestment of dividends) of 3.9% since January, 2004. While we are not today suggesting that Weyerhaeuser divest its timberlands, we are strongly suggesting that the Company must modify its corporate structure to become more efficient vis-à-vis the REIT structure. FMA believes that this step, along with the closing on the sale of the Fine Paper business and executing and accelerating the current restructuring plans in the containerboard business, will enhance shareholder value over the long-term." (Read More)

Weyerhaeuser immediately responded in a subsequent 8-K filing with the SEC, citing uncertainties surrounding current legislation as their reason for hesitation. The 8-K filing also noted several other actions that the company has taken to actively unlock shareholder value:

"Weyerhaeuser’s Board of Directors and management are firmly committed to improving the company’s financial performance and enhancing shareholder value. Our ongoing review of options to create additional value has included a detailed analysis of the benefits, complexities, and risks of various alternative structures. That review has led us to the determination that the most value creating alternative would be equitable tax treatment for C-corp. timberlands owners. We will continue to actively support the industry initiative for tax legislation, however, in light of the uncertainties surrounding a legislative remedy we are now revisiting alternatives.

As you note, during the last 18 months we have taken action to restructure Weyerhaeuser’s operations to create value for shareholders. In August 2006, we announced a definitive agreement to combine our Fine Paper business and related assets with Domtar. The transaction will give Weyerhaeuser shareholders 55 percent ownership in the new company, which will be the North American market leader in fine paper, and includes a $1.35 billion cash payment to Weyerhaeuser. The transaction with Domtar will provide Weyerhaeuser shareholders with the opportunity to participate in the benefits of owning the combined company. This compelling combination is expected to be tax-free for Weyerhaeuser and its shareholders and is on-track to close in the first quarter of 2007.

With regard to the Containerboard Packaging restructuring, the benefits of increased customer service and more efficient asset utilization are already being realized. Upon completion of the restructuring, we expect to achieve substantial earnings improvements. We share your sense of urgency and are committed to completing the restructuring of these operations in the shortest time possible.

In addition to the actions discussed above, we strategically grew our real estate business through the acquisition of Maracay Homes to give us access to the high-growth markets of Phoenix and Tucson, and expanded existing real estate operations into the Portland, Oregon and Sacramento markets. We are also growing our timberlands in South America and we have begun a process of constructing converting facilities.

The Board has demonstrated a strong commitment to returning value to shareholders. Over the last 18 months, we have increased Weyerhaeuser’s annual dividend twice to $2.40 per share, an increase of 50 percent. We have also continued to aggressively execute on Weyerhaeuser’s 18 million share repurchase program." (Read More)

While the company has a very competent management team that is actively increasing shareholder value, Franklin's recommendations becoming public only increase the pressure on the company to institute new restructuring plans aimed at unlocking shareholder value. This pressure has already materialized in Weyerhaeuser's announcement late Thursday that it will revamp its lumber operations in Washington to be more competitive. Many analysts are also excited by the value potential of the C-corp to REIT proposal along with other structural changes, which caused a series of upgrades lately by USB and others. This long-term value potential makes WY a stock worth watching!

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