SunTrust Banks (NYSE:STI) shares dropped over one percent today after the company announced several initiatives to enhance shareholder value, concluding its process of exploring various "value initiatives". These initiatives are focused in three areas: efficiency and productivity, SunTrust's ownership of Coca-Cola common stock and capital optimization/balance sheet management.

SunTrust's primary objective is to sell its stake in Coca-Cola, which is one of the largest components of its portfolio. The company then plans to use that money to repurchase $750 million to $1 billion of their own stock during the rest of 2007. Through a combination of its previously announced 20% dividend increase and anticipated share repurchases, the company expects to return over 90% of its earnings to shareholders in 2007!

SunTrust also expects its cost cutting efforts to result in an annual gross cost savings for 2009 of $530 million - nearly 50% greater than its original estimates. Additional efficiency and productivity improvements may also make their way to the company's bottom line by 2009.

While many shareholders were clearly hoping that this process would result in a sale of the company (that's why its down today), 90% of earnings being returned to shareholders is certainly nothing to complain about! STI is a stock worth watching closely over the next year as they begin to execute their plan...

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Ceridian Corporation (NYSE:CEN) shares moved down marginally today after the company said it fired Comdata executive Gary Krow for disclosing confidential information to activist hedge fund Pershing Square. Ceridian said it learned about the violation through testimony in the company's lawsuit with the hedge fund, but Pershing Square continues to insist that it did not receive any confidential information concerning the company or its affiliates.

Gary Krow wasn't the only executive fired either - just a few months earlier the company terminated CFO Doug Neve. Interestingly, both of these executives hand delivered written letters to the company's board criticizing senior management. Shortly after these letters were received, Chairman and CEO Ronald Turner announced his resignation. Meanwhile, almost all of these key positions were filled with ex-GE employees - a troubling trend among management and the board.

This mysterious series of events prompted Pershing Square to sue the company in an effort to obtain these letters to management. The letters could not only provide very material information that shareholders deserve, but also information that could be used in a potential proxy solicitation if the hedge fund decides to try and replace the board. Unfortunately, the courts ruled on Friday in favor of Ceridian. Apparently, owners do not have the right to view management conversations...

Pershing Square was initially just seeking a spin-off to unlock value in the company's Comdata division and prevent an acquisition-based strategy, but their involvement has since brought to light an apparent host of other problems with the company's board and management. The secretive letters not only prompted the resignation of the company's CEO, but also spawned a probe by the SEC into the company's ethics policies.

Finally, to compound the problems at Ceridian, the company failed yet again to set a record or meeting date for the annual shareholders meeting, which makes it impossible for shareholders to express their views and make changes to the company they own. When the date is finally set, the company will be in for a fight. Pershing Square reportedly obtained documents from Krow outlining lists of shareholders that would support him and his goals to spin-off Comdata. Combined, these factors make CEN a stock worth watching!

For more information on the lawsuit and ethical issues, see Nashville Post's article on the subject.

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Mylan Laboratories (NYSE:MYL) shares fell over 11% today after the company agreed to pay $6.6 billion for the generic-drugs unit of Merck KGaA. The acquisition will create a leading global generic drug manufacturer with combined revenues of $4.2 billion in 2006 and 10,000 employees.

Strong competition and tight profit margins in the generic drug industry has forced a wave of consolidation in the sector. Mylan had been trying to find a new target after its failed bid to acquire King Pharmaceuticals in 2005 thanks to Carl Icahn's intervention. Meanwhile, Merck KGaA was the world's #3 generics business by revenue in 2006 and makes a great strategic fit with the company for the long-term.

Many analysts and shareholders questioned the wisdom behind the acquisition. Analysts were surprised by the large bid, which came in at the top of most estimated ranges, while shareholders were distraught by the massive dilution and long payoff time-frame. The $6.6 billion mega-merger is expected to be dilutive to earnings in the first year, earnings neutral in the second year and finally positive in the third year.

Overall, the merger will combine two great generic drug companies to create a market leader. While this process clearly resulted in some short-term pain, many investors are banking on the long-term picture to provide ample returns long into the future. Either way, this is a stock that is definitely worth watching!

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Ford Motor Company (NYSE:F) shares jumped more than 5% in early trading after rumors surfaced that the Ford family was considering selling off its controlling stake. Bloomberg reported that executive chairman Bill Ford Jr. had briefed directors on the Ford family members' views before the shareholders meeting last Thursday, citing unnamed sources.

The reaction to the rumor suggests that shareholders do not want the family to have a controlling stake. The Ford family only owns only 4% of the company's shares, but due to a dual class voting structure they control nearly 40% of the votes. And in an M&A market that recently paid $7.4 billion for 80% of DaimlerChysler, shareholders probably don't want any nostalgic owners getting in the way of handsome profits.

These dissident shareholder views were further reflected by the company's annual meeting last week that had the third straight proposal to eliminate the B shares. The proposal drew 27.4% of the vote, but the company opposed the plan saying that the B shares provided "long-term stability" to the company. Combined with the recent cross-generational Ford family feud, many investors are hoping that the family will simply unload or convert its shares.

However in the end the family's attorney cleared the air saying, "The Ford family is not discussing the sale of its holdings in Ford Motor Company. Statements attributable to unnamed sources are untrue." Whether or not the family will eventually sell remains to be seen, but at least we know where the shareholders stand!

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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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