CVS Corporation (NYSE:CVS), seeking to thwart rival suitor Express Scripts sweetened its offer on Thursday for Caremark to $54.12 a share, plus a higher, one-time dividend of $7.50 per share in cash after the deal closed. The dividend previously was $6 per share. CVS also said if the deal is closed, the combined company will make a cash tender offer of $35 a share for 150 million, or about 10%, of its outstanding shares.

Frank Stronach, CEO of Canadian auto parts giant Magna International (NYSE:MGA), confirmed that his company could be interested in taking a stake in DaimlerChrysler's Chrysler division. Stronach said it was vital that Magna be involved in a possible sale of Chrysler to protect itself and help its biggest customer, which carried the first public comments by Magna owner since Chryslers Feb 14 announcement that it would cut 16% of its employees.

Shares of Yahoo (NDAQ:YHOO) tumbled Friday amid reports that the Web portal's deal with AT&T to sell high-speed Internet access may be on shaky ground. The companies reported to be negotiating potentially sweeping changes that could scale back their partnership, according to the Wall Street Journal. The potential fraying of the alliance deals an unexpected new blow for Yahoo, which gets roughly $210 million to $290 million in subscription and advertising revenues annually from AT&T, according to Goldman Sachs analyst Anthony Noto. Yahoo shares fell $1.64 to $29.07 in early afternoon trade on Nasdaq. They had risen around 13% so far this year, prior to Friday's decline. AT&T shares firmed $0.11, or 0.3%, to $36.62 on the NYSE.

Coca-Cola (NYSE:KO) said that it is reorganizing its North American business to better reflect its strategic focus and creating three new business units for its sodas and other beverages as part of the change. In a note to employees, Coke North America President Sandy Douglas said the new operating model has been designed "to transform our business and win in the marketplace."

A second U.S. investment firm dismissed Citigroup's (NYSE:C) $10.8 billion buyout offer for Japanese brokerage Nikko Cordial as far too low, pressuring the U.S. bank to sweeten its bid. Nikko's stock rose to trade 4.4% above Citigroup's offer price after Tennessee-based Southeastern Asset Management, Nikko's third-biggest shareholder, said the brokerage was worth at least 48% more.

Strong demand for corn from ethanol plants is driving up the cost of livestock and will raise prices for beef, pork and chicken, the Agriculture Department said. Meat and poultry production will fall as producers face higher feed costs, the department said in its monthly crop report. Ethanol fuel, which is blended with gasoline, is consuming 20% of last year's corn crop and is expected to gobble up more than 25% of this year's crop. The average price of corn, unchanged from last month, is $3.20 a bushel, up from $2 last year.

Procter & Gamble Co. (NYSE:PG), maker of Tide detergent, Crest toothpaste and numerous other consumer products, reaffirmed its Q3 earnings guidance. The company expects earnings of $0.72 to $0.74 a share for the quarter ending later this month. P&G said it expects sales growth of 7% to 9% in the quarter. Shares rose $0.10 to $62.41 in morning trading on the NYSE. Shares have traded in the range of $52.75 to $66.30 in the past year.

New Century (NYSE:NEW) shares lost a quarter of their value, plunging 25%, or $1.29, to $3.87 on the NYSE. After the closing bell, the stock fell an additional 2.6 % to $3.77 in electronic composite trading.

Financial stocks moved up today: Bear Stearns (NYSE:BSC) shares added 1.8%, or $2.69, to $152.06 on the NYSE while Goldman Sachs (NYSE:GS) rose 2.2%, or $4.35, to $199.94.

Retail stocks recovered on optimistic economic news: Target (NYSE:TGT) climbed 1.8%, or $1.09, to $61.69 and J.C. Penney (NYSE:JCP) shares rose 4.1% to $80.86, both on the NYSE. Department store operator Bon-Ton Stores Inc. (NDAQ:BONT) shares shot up 15.8%, or $7.56, to $55.36 on the Nasdaq.

Steel maker Nucor Corp. (NYSE:NUE) jumped 5.3%, or $3.17, to $63.12 on a strong forecast and helped other stocks in the sector. U.S. Steel Corp. (NYSE:X) gained 3.2%, or $2.81, to $90.51.

Phone company AT&T (NYSE:T) was the top-weighted gainer in the Dow and the S&P 500 following a European bond issue and an upgrade by A.G. Edwards. AT&T shares climbed 3.1%, or $1.08, to end at $36.51 on the NYSE.

Weyerhaeuser Company (NYSE:WY), which has moved up well over 40% since the middle of 2006, is now considering making changes to its centuries old corporate model. Many activist shareholders have been pushing the lumber giant to sell everything but its timberland operations and restructure itself as a Real Estate Investment Trust (REIT) in an effort to save millions with the new tax structure. The company initially resisted the idea, however, opting to maintain its current corporate structure while pushing for federal legislation that would make it cheaper to operate its timberlands. But recently, the company announced that it would explore all of its strategic options, including a possible restructuring.

Why the commotion? Well, Weyerhaeuser first caught the attention of investors after a series of transactions in the timberland sector gave some insight into the value of their real estate holdings, which some estimate as high as $3,000 per acre. And given the company's 5.7 million acres of land in the Pacific Northwest, the valuation of their timberland operations becomes a huge number! Investors speculate that the company could be valued at around $83 per share if the company's divisions were split up or sold off and as high as $108 if it converted itself into a REIT without a big tax penalty. Investors also stand to gain substantially if the company's proposed legislation (sponsored by Artur Davis) passes, which would cut the company's tax rate by 60% to about 14% - roughly the same as an REIT would pay. Now that the company is officially exploring these strategic options, WY is definitely a stock to keep a close eye on!

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Applebee's International, Inc. (NDAQ:APPB) moved up $0.06, or 0.24%, to $25.23 today after Breeden Capital the company's offer for two seats on the Board of Directors. Breeden Capital had been seeking four seats in what has been a long standing battle with the company. We first began covering this story back in December when Breeden Capital expressed disappointment with the company's operating results and valuation. Specifically, the hedge fund pointed out APPB's chronic under-performance compared to other company's in its peer group. They noted Applebee’s performance was 113.3% worse than Darden, 51.7% worse than the S&P 500, and 47.4% worse than the 75th percentile of the casual dining peer group. Moreover, they pointed out the company's deteriorating fundamentals by showing declining same-store sales (5.2% to -1.0%), declining operating margins (16% to 12.4%), and declining return on capital invested (16% to 10%). Clearly, there is cause for concern at Applebees!

So, what does the hedge fund plan to do about it? Well, they outlined several changes that they would make in a past letters to the Board of Directors:

1. Significantly reduce the number of company-owned restaurants by re-franchising a substantial number of restaurants in a multi-year program.
2. Cease all further capital expenditures to open new company-owned restaurants, and minimize capital expenditures to renovate company-owned restaurants pending their sale.
3. Reduce overall expense levels, especially in corporate level overhead, and dispose of non-core assets.
4. Use excess cash generated from these steps and improved performance to increase the return of free cash flow to shareholders.
5. Improve various governance practices, including reducing the number of insiders on the company's board, precluding former CEOs from continued board service, strengthening independence requirements, eliminating the personal use of corporate aircraft and abolishing your staggered board.
6. There should be a moratorium on any incentive compensation for any tier one executives so long as TSR remains negative. Similarly, incentive compensation should be zero if the company remains in the fourth quartile of relative performance in generating TSR.
7. A large proportion of incentive compensation (such as 50-75%) should be based on relative measures of performance compared to the company’s publicly traded casual dining competitors.
8. Growth in average per restaurant royalty fees from franchise operations should be included as an incentive target for relevant executives (including the CEO and CFO), since franchisees represent 73% of the company’s system.
9. The level of free cash flow would be a healthy measure for some portion of incentive opportunities, especially for the CEO and CFO.
10. Minimum relative performance in generating TSR or EVA (such as being in the top 20%) should be a significant part of every executive’s target incentive eligibility. All executives should have a vital stake in the company outperforming its peers.
11. Personal use of corporate aircraft should be banned. Tax gross-up payments made during the last three years should be repaid to the company.

So, what happens now? Well, since Breeden Capital has rejected the two board seat offer, it is up to the company to either produce a counter-offer of four seats or face a possible proxy fight. The first step to watch for that would indicate a proxy fight would be an official declaration by Breeden asking for the company's shareholder records so they could mail proxy materials - which would be found in a future DEF14A filing with the SEC. Meanwhile, if the hedge fund's nominees are elected to the company's Board of Directors, it could mean significant share appreciation over the long-term for the company's shareholders. This makes APPB a stock worth watching!

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