Lyondell Chemical (NYSE:LYO) shares jumped $3.45, or 10.43%, to $36.52 today after Russian billionaire Leonard Blavatnik bought the rights to acquire 8.3% of the company in a forward contract arranged by Merrill Lynch. The block of shares is being sold by Occidental Petroleum (NYSE:OXY).

Blavatnik offered a fairly bland disclosure in his Schedule 13D filing with the SEC, saying that he may seek to engage in discussions with the company related to an offer to acquire all of the shares of Lyondell or to discuss a combination or similar transaction with Access or Basell holdings.

Occidental Petroleum is also up 2.5% on the news of the sale. The company has not said what it plans on doing with the gains on any sale of its stake in Lyondell Chemical. However, both of these companies are worth watching closely!

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Archer Daniels Midland Company (NYSE:ADM) shares moved up $0.68, or 1.92%, to $36.18 this morning after extraordinary call option volume fueled speculation that the company could be the subject of a buyout. The focus was on the $40 calls expiring during the next few weeks as about 35,000 call options changed hands compared to merely 5,800 puts.

Deutsche Bank maintains a list of 25 potential takeover targets based on underlying options activity. Among the targets are the obvious Alltel and Wendy's International along with Sovereign Bancorp, Countrywide Financial, and Gap Inc.

Now, call options purchasing doesn't necessarily mean there isn't any substance to these rumors; rather, they are typically used be traders to spread their bets across many potential opportunities in hopes of a home run. Many investors, however, incorrectly see the move actions based on insider knowledge - which can happen, but is almost always not the case.

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Wal-Mart Stores Inc. (NYSE:WMT) announced its same-store sales dropped 3.5% this month, which was by far the worst since it began reporting monthly sales 28 years ago. Excuses from the company included bad weather, an early Easter and near-record gasoline prices that collectively put a huge damper on consumer spending at the world's largest retailer.

Five other retailers also cut their fiscal first-quarter earnings forecasts after reporting similar drops in same-store sales figures. These included Sage Stores, Pacific Sunwear of California, Children's Place Retail Stores, Cato, and New York & Co. Meanwhile, Ambercrombie & Fitch and Aeropostale saw similar slides around 15% in same-store sales, which indicates that the trends are affecting high-end fashion retailers as well.

Same-store sales are considered one of the best indicators of consumer spending strength, brand recognition and other factors affecting a retailers' net income. For more information on how to analyze retailers using this metric, see our article How to Analyze the Retail Industry.

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Arbinet-thexchange, Inc. (NDAQ:ARBX) is a takeover candidate that has not received much press. Two days ago, Singer Children's Management Trust disclosed a 7.04% stake in the company and expressed its concern over the company's future. Particularly, the hedge fund believes it is in the best interest of shareholders for the company to pursue a sale.

Around October 23, 2006, the company formed a special committee to review strategic alternatives and hired Jefferies & Company as its financial advisor. These strategic alternatives included a possible sale or merger of the company. Seven months later, however, shareholders are still waiting for the results. Singer demanded that if the company has tangible results, including a potential buyer, they should immediately disclose it to shareholders.

Is the company simply delaying the announcement of an unsuccessful review? Well, Tom Watts, an analyst with Cowen & Co. suggested that there is demand for a company like Arbinet after the $55 million merger last year of the international wholesale voice business of Royal KPN with iBasis. He said it is just a matter of finding those potential buyers and seeing what they're willing to pay. Morover, the company's former chairman and CEO indicated he would pursue a bid for the company, but has not publicly disclosed an offer.

So, where do things stand now? In a conference call on Tuesday to discuss first-quarter earnings, CEO Curt Hockemeier declined to discuss the company's strategic review, saying only that it continues. We do know, however, that its professional fees increased to $1.1 million stemming from the review! Whether or not the company has found a buyer remains to be seen, but patience is quickly running out...

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Arrow International (NDAQ:ARRO) shares jumped $5.98, or 18.21%, to $38.82 today after the company announced that it formed a special committee to explore strategic alternatives. The company hired investment banking firm Lazard Freres & Co. to assist them in connection with the review.

Interestingly, Richard Niner, who resigned from the company's board on May 4th, commented, "For the last several months the board, in fits and starts and in a clandestine manner led by its four founders, has been pursuing a sale strategy for the company. The strategy, I believe, is being pursued at the wrong time, for the wrong reasons and in the wrong way."

The comments gave merit to speculation that the company was considering putting itself up for sale as opposed to exploring other internal strategic options. Given the apparent support by the board of directors and shareholders (evidenced by today's spike) it's safe to say that a sale is a strong possibility provided there are willing buyers. The high buyout premiums we've been seeing recently are also very attractive for opportunistic investors.

Arrow said it does not plan on providing updates or making further comment until the outcome of the process is determined or until there are significant developments. Moreover, the company has set no timetable or guarantee that the company will pursue any strategic options.

Despite Niners objections to the company putting itself up for sale, this is clearly the direction in which the board is heading. This makes ARRO a stock worth watching!

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Alltel Corporation (NYSE:AT) shares moved up $1.29, or 1.98%, to $66.49 today after a Wall Street Journal report added to long-standing rumors that the company could be a buyout target by Verizon, Spint-Nextel or several private equity buyout firms. The report marks the second time the WSJ reported that private equity was circling the company - the first was back in December of this year. Now, the newspaper insists that the firms are closing in on a deal.

The company has more than 12 million subscribers, which makes it the fifth largest mobile phone provider. The company also consistently ranks higher on consumer evaluation polls and has outpaced its competitors when it comes to rolling out new features and services. The company also has many roaming agreements with several other large carriers, which is a great bargaining chip for any potential suitors. Finally, given the company's low debt and strong balance sheet, a substantial amount of debt could be used in the event of a leveraged buyout.

The WSJ noted that three separate groups of private equity buyers have been formed to evaluate a takeover of Alltel. The groups are: Blackstone Group and Providence Equity Partners; TPG Capital and Goldman Sachs; and Carlyle Group and KKR. Many analysts believe that the private equity firms were simply interested in holding and operating the company until a mobile phone carrier appeared ready to bid for the company. This makes AT a company worth watching!

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Griffon Corporation (NYSE:GFF) may face more pressure from dissident shareholders after the Clinton Group (CGI) and its affiliates disclosed an 8.3% stake in the company and disclosed a letter to the board of directors. The activist hedge fund expressed disappointment over the extent of the company's decline in earnings and its inability to responsively adjust cost structures, which total more than $20 million annually.

CGI believes that the company's "mini-conglomerate" corporate structure where management ostensibly oversees three unrelated businesses for huge renumeration is simply unacceptable. While the company did retain Goldman Sachs to explore strategic alternatives, the hedge fund suggested that it be mandated to narrow these to either a sale of the company in whole or in parts or a public recapitalization aided by a qualified financial sponsor. The hedge fund believes this is the best way to unlock value for shareholder amid a string of un-kept promises and out-of-control costs.

Finally, CGI also noted that the company failed to respond to any of the management issues that were brought up in its previous letters to the company - particularly, the devices in place to entrench management and the board. The hedge fund threatened to conduct a proxy fight to replace board members if the company failed to address these issues soon. Combined, these factors make GFF a stock worth watching!

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Movie Gallery (NDAQ:MOVI) shares moved up $0.33, or 9.82%, to $3.69 today after Schultze Asset Management disclosed a 14.4% stake in the company and requested a meeting with the board to propose a number of possible shareholder value-enhancing steps.

The hedge fund suggested that the steps could include a shareholder rights offering to raise funds from existing shareholders in an effort to reduce bank and/or bond debt so that future interest expense may be lowered and/or to raise cash for generate corporate purposes.

Rights offerings are somewhat uncommon type of securities offering. They entail the company offering shareholders the right but not obligation to buy newly issued shares in the firm. Sometimes a company's management or shareholders will try to institute a rights offering in order to limit the public knowledge of buying or limit the opportunities for outsiders to enter. Depending on the terms of the offerings, they can be a great opportunity to acquire rights to purchase stock on extremely reasonable terms.

Movie Gallery was facing some trouble last year and is still burdened with substantial debt from its acquisition of Hollywood Video. The stock is up marginally, however, from its 52-week low despite having dropped shoftly after the launch of its new online rental service. The rights offering as well as the potential for more shareholder activism make MOVI a stock worth watching!

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PDL BioPharma (NDAQ:PDLI) shares moved up marginally after Cary Queen announced support for Third Point's proposals for a new direction at PDL in an open letter to the company's board of directors. Daniel Loeb's Third Point first made their proposals back in March of this year and we are still waiting for a response from the company.

Why is this support important? Well, Cary Queen is not only the co-founder of the company, but also inventor of the patents from which PDL derives much of its revenues, a significant shareholder and a senior executive and director of PDL for most of its history. She clearly has a lot of history with the company and a good idea of how they can unlock shareholder value.

Cary Queen insists that PDL's problem is quite clear. The BTK index, which comprises many of PDL's competitors and comparable companies, climbed 43% between 2004 and 2006. Meanwhile, PDL's royalty and license income grew by 250% from $72 million to $249 million. Yet somehow PDL's stock price fell by 15%!

Many dissident shareholders, including Queen, believe that if PDL management had simply let more of the dramatic revenue increase reach the bottom line while focusing on timely development of PDL's own products, the result would have been far better. Instead, management's lack of focus, critical product development delays, out-of-control spending, and ill-advised acquisition of ESP Pharma led to value destruction and shareholder confusion.

The chances of a response from the board of directors greatly increased with the addition of Cary Queen. Many investors are now hoping that Daniel Loeb's confrontational nature combined with Cary Queen's close relationship to the company will be enough of a catalyst for the board of directors to pursue some long-term changes to enhance shareholder value. These factors make PDLI a stock worth watching!

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3Com Corporation (NDAQ:COMS) shares rose $0.24, or 5.7%, to $4.45 after Kenneth Griffin's Citadel LP disclosed an 8.4% stake in the company and expressed his concerns with the company's management team.

The hedge fund manager pointed out in his letter that 3Com's share price has under-performed both relative and absolute measures of shareholder return for many years. More recently, the market's reaction to 3Com's purchase of Huawei Technologies' 49% ownership in H3C has resulted in nearly a 20% decline in share price. Clearly change is needed!

Kenneth believes that many options exist today for the creation of substantial value for 3Com shareholders and insisted that he be able to meet with the management team and board of directors to discuss their corporate strategy going forward. While there was no clear indication of what "options" are being considered to create "substantial" value, many investors are confident that the shareholder will be able to help the company.

Citadel is one of the largest and most successful hedge funds in the world. Its manager, Kenneth Griffin, is a self-made billionaire and extraordinary individual. He founded Citadel in 1990 with just $4.2 million and grew it into the $13.4 billion fund that we know today. The majority of the firms profits come from active trading (its daily trading volume is estimated to amount to 3% of the activity in New York and Tokyo!) but it is carefully moving into more fundamental and activist plays like this one.

Combined, these factors make COMS a stock worth following!

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