Anheuser-Busch (NYSE:BUD) shares moved up $0.70, or 1.32%, to $53.84 on speculation that the company could be a takeover target for Bill Ackman's Pershing Square hedge fund. The suggestion was first brought forth by the New York Post, which broke news from the fund's shareholder meeting.

The speculation stems from statements that Ackman made to shareholders when it raised $2 billion in additional equity. The activist investor told investors that the money would be used to purchase a controlling interest in an "iconic American company" worth between $30 and $40 billion. He also stated that the target company has three divisions. While Ackman declined to comment on these reports, Anheuser-Busch happens to fit this bill perfectly.

Many traders in this situation wait for an initial run-up and then utilize options strategies such as an options backspread to take advantage of the impending volatility. The logic is that once the stock has moved up on speculation, it will settle down if the rumor is false. Meanwhile, if the rumor is true then the stock will move much higher on a buyout.

Overall, this is nothing more than speculation; however, it is certainly a stock worth watching in the near future or a stock to trade for active day traders!

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Avaya Inc. (NYSE: AV) has accpeted a buyout offer of $8.2 billion from Silver Lake Partners and TPG Inc. The deal values Avaya at $17.50 a share, a 28% premium over the $13.67 a share the stock closed at before the buyout rumors began on May 29th.

Avaya is the world`s largest producer of corporate phone network equipment, and this all-cash leveraged buyout is the largest ever of a computer-network company.

Despite the rich price, Avaya is not without its problems. Increasingly, corporatations are moving away from tradition phone systems to internet-based systems. In 2006, Avaya reported only a 5% increase in sales to $5.15 billion, with $200 million in net income.

Avaya`s real appeal, especially compared to faster-growing corporate telephone rival Cisco Systems (NASDAQ: CSCO), is the vital patents it holds for Internet telephone technologies combined with being a cash cow - besides being debt free, Avaya generated more than $200 million in operating cash in the second quarter of this year.

Avaya, having had the premium mostly built into the stock price over the last week of speculation, is trading slightly higher at $17.07, up 2.09%.

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General Motors (NYSE:GM) shares rose marginally after a Wall Street Journal article dispelled any rumors that the automaker might go private in a booming automotive consolidation wave. CEO Wagoner resonded to the shareholder inquiring following the sale of DiamerChrysler to Cerberus Capital Management.

The move raises further questions, however, for the automaker that continues to struggle with soaring heathcare costs, lackluster sales and declining margins. GM also faces increasing competition from foreign companies like Toyota that continue to take marketshare. General Motors executives noted these problems and conveyed to shareholders that this summers' United Auto Workers Union negotiations should further their efforts.

Other things on the plate for GM include their efforts to take bankrupt autoparts maker Delphi back into the black; however, the two have yet to find suitable equity backers for their plans. Meanwhile, GM announced plans not long ago to introduct new Chevy Volt concept car, which runs on efficient battery power.

So, what does all of this mean for investors? Well, private equity's interest in the automaker sector sends a clear signal that some of Wall Street's best believe the sector is undervalued. Moreover, if GM is able to negotiate with its unions to lower costs (particlarly in healthcare) it could dramatially improve their bottom line. And combined with a successful new concept car, GM could be a great stock to own in the future...

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Palm Inc. (NDAQ:PALM) shares spiked $1.41, or 8.73%, to $17.50 in early trading today after the company announced that it would sell a 25% stake to a private equity partner that will bring former Apple Inc. (NDAQ:AAPL) executives onboard. Elevation Partners announced that it would purchase the stake in Palm for $325 million - a substantial premium to Palm's valuation - and bring in new leadership that may help Palm finally turn itself around.

The company began the process of exploring strategic alternatives earlier this year as many speculated that the company could become a buyout target for device makers interested in the company's technology. This new move, however, is welcome news for investors who jumped the stock price in support. Among the new executives being brought in is Jon Rubinstein - the company's co-founder and top product designer who helped pioneer the hit iPod.

Some investors remain skeptical, however, as to whether or not the company can compete with such a small market cap compared to others like Nokia. While the deal announced today does not specifically address that issue, the company does plan on introducing a number of new products and technologies to broaden their offerings. Meanwhile, the new talent will ideally help the company use these new offerings to take market share away from existing competitors.

Clearly, this private equity involvement is good news for all involved. Palm's plans to extend their product line and take on great new management personnel illustrate their commitment to improving shareholder value. This makes PALM a stock worth watching!

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LandAmerica Financial Group (NYSE:LFG) shares moved up last Friday and held their gains today after Viking Global disclosed a 7.9% stake in the company and expressed their belief that the company should be sold. LFG has been a solid performer during the past year, moving up over 70% since the end of 2006. The gains can be attributed to several new programs and initiatives designed to boost earnings during a tough market.

Viking Global said that while it is pleased with management's initiatives to improve the company, a large scale acquisition of the company could add $7 to $8 per share via synergies. This would double the company's earnings per share and create a substantial buyout premium. The activist hedge fund suggested that the probability of a deal would be high and that the board should carefully evaluate whether shareholder interests would best be served through a buyout or by remaining independent. Either way, this is definitely a stock to keep on the radar.

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After a quick double in price last week Cypress Biosciences (NDAQ:CYPB) is again in the news after Black Horse Capital Advisors disclosed a 1.2 million share stake and said it opposed the company's plan to sell 4.7 million shares of stock in a public offering and urged the company to consider adopting a share buyback plan instead.

The activist hedge fund said it was pleased with the company's very successful Phase III results Milnacipran in Fibromyalgia Syndrome and suggested that the drug should provide the company with substantial revenues in the future. However, the company now has too much cash - specifically, $100 million in cash with no debt and a low cash burn rate. Combine this with a successful late stage drug and it is difficult to see why the company would need to issue more shares to raise money!

What does this mean for investors? Well, a large scale share buyback combined with the avoidance of issuing any new shares would likely increase the company's share price and reward investors with cash that is simply being unused right now. And Black Horse also hinted that if these demands are not followed they may consider other options available to them as large shareholders - presumably a proxy fight. Combined, these factors make CYPB a stock worth watching!

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PDL Biopharma Inc. (NDAQ:PDLI) moved up marginally after activist investor Third Point disclosed a 9.8% stake in the company and asked the unconflicted directors of PDL BioPharma to conclude their investigation into CEO McDade's suspected ethical and business breaches as quickly as possible. The hedge fund also nominated BioMarin Pharmaceuticals CEO Jean-Jacques Bienaime to their proposed slate of directors.

The letter address to board members was a follow up to one sent out privately three weeks earlier. In the letter, Third Point suggested that shareholders could best be served through the termination of CEO McDade, the addition of three shareholder representatives to the company's board, and finally the hiring of an investment bank to explore strategic options for the company.

The adoption of these three recommendations would substantially increase the company's share price. Obviously, if the company formally announced that it was exploring a possible sale it would cause a quick jump while the firing of McDade and inclusion of shareholder representation on the board is definition bullish in the long-term.

The problem is simply the McDade has tight control over the board as well as management - a classic agency problem. The only way to effect change may be through a proxy fight, which is always a possibility with Third Point. Combined, these factors make PDLI a stock worth watching!

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The Bancroft family, who through a dual-class share structure control 64.2% of Dow Jones & Co. (NYSE: DJ) votes, agreed to meet with Rupert Murdoch's News Corp. (NYSE: NWS) about his unsolicited $5.6 billion bid for the company.

This will be music to shareholders' ears as the Bancrofts had initially rejected News Corp.'s offer exactly one month ago. It has been widely speculated that the bid for the company was too substantial to not seriously consider as it represented a 65% premium over the share price at the time.

Critics of the proposed buyout warn that the Wall Street Journal, the centerpiece of Dow Jones & Co.'s holdings and certainly Murdoch's most coveted prize in the deal, would suffer from a decline in the quality and neutrality of the writing. In fact, placing journalistic integrity before profits, if necessary, is part of the reason Dow Jones & Co. has a dual-class share structure that allows the Bancrofts to control its fate.

Michael B. Elefante, a director of Dow Jones & Co. and a representative of the Bancrofts, said in a statement that the meeting with News Corp. will explore if "it will be possible to ensure the level of commitment to editorial independence, integrity and journalistic that is the hallmark of Dow Jones."

Editorial independence aside, Dow Jones & Co. is suffering from the same problems ailing the entire newspaper industry as readership and thus advertising slows or declines. As Ed Atorino, an analyst at Benchmark Co., said, "I think [the Bancrofts] are facing the reality of the situation -- that this [bid] is a one-time-only event." See, money talks.

Dow Jones & Co. is soaring to nearly $61 a share on the news, while News Corp. is up a slight .72%.

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Griffon Corporation (NYSE:GFF) shares moved up $1.54, or 6.97%, to $23.65 today after Clinton Group disclosed an 8.5% stake in the company and suggested that the company undergo a recapitalization. The proposal would tender 50% of Griffon's outstanding shares at a price of $25 per share, but has yet to receive a meaningful response from the company.

Clinton Groups proposal is contingent on financing from two lien bank loans and financing from the hedge fund and its affiliates. The proposal would also require the hedge fund to institute several of its own board members and implement a restructuring plan aimed at improving the profitability of Griffon's businesses.

In the end, Clinton Group believes that a recapitalization of the company combined with measures designed to reduce expenditures and improve the bottom line would drastically increase the stock's valuation. Using a multiple of 15x price to earnings on a tax affected $20 million of savings divided by a share count 43% less than the current number yields in excess of $9 per share in incremental value. Clearly, this would be great news for shareholders and makes GFF a stock worth watching closely!

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Motorola Inc. (NYSE: MOT), the wireless handset and cell phone maker, announced yesterday that it would be laying-off another 4,000 workers, in addition to the 3,500 job cuts it announced in January, as part of its continuing efforts to manage costs.

These new lay-offs, in conjunction with other cost-cutting measures, are predicted to save the company $600 million in 2008, and the previously announced workforce reduction will ultimately eliminate another $400 million in costs.

The continuing efforts at Motorola to tighten the corporate belt are described by company CFO Tom Meredith as an "update to the commitment...to drive out additional costs," an initiative announced at the company's first-quarter conference call.

Motorola is in need of cost controls as it posted a net loss in the first-quarter of this year in the face of declining handset sales and lackluster new cell phone models. The poor performance of the company's stock, only a dollar off its 52-week low, led activist billionaire investor Carl Icahn, who has a 2.9% stake in the company, to seek a seat on its board in elections this month.

Icahn lost the election to the company-backed candidate, John A. White, by a margin of about 13% but still received more than 700 million votes in the process. The election followed a series of exchanges, primarily in letters to shareholders, between Icahn and company management in which Icahn attacked what he saw as mismanagement of the company, especially in comparison to rival Nokia (NYSE: NOK).

Motorola stock is basically unmoved, down .27%, on the news today.

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