Axcan Pharma Inc. (NDAQ:AXCA) shares rose marginally today after 9.95% holder Pennant Capital Management said they were disappointed with the $23.35 per share buyout price by TPG Capital. Shareholders remain divided on the issue, however, given the fact that the M&A market has suffered a dramatic setback since the credit crunch, which has lowered valuations across the board.

"While we support selling the Company, we believe the valuation indicated is inadequate considering the strong cash flows of the business coupled with significant net cash on the balance sheet," said Alan Fournier, managing partner of Pennant. "We believe the company is worth at least $25 per share using a relatively conservative 8x EBITDA multiple which still results in a high single digit FCF yield."

Pennant also questioned the timing of the deal, pointing out that it was announced concurrently with very strong revenue and earnings report that, couple with guidance, likely would have driven a recovery in the stock price. The speculation is that the deal was announced so that the premium looked much more substantial than it would have reacted had they waited until after the earnings report.

In the end, Axcan is a great company that recently reported strong results. The buyout offer may be ill-timed and inadequate, but it does represent something that the company should carefully evaluate. The board should also work to disclose the details of the process and evaluation to allow shareholders to assess the fairness of the transaction. Combined, these factors make AXCA a stock worth watching!

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Axcan Pharma Inc. (AXP)
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In a report today, the Mortgage Bankers Association said that delinquencies rose to over 5.5%, making them the highest they have been since 1986. Delinquencies, defined as being more than 30 days behind on mortgage payments, are seen as spelling future trouble for the housing market as many delinquencies turn into foreclosures, and an increase in foreclosures would further depress an already tough market for sellers.

Despite this news, the most prominent mortgage lender is up over 10% on the day. Countrywide Financial Corp. (NYSE: CFC), with a market capitalization of over $6 billion despite losing more than 80% of its value this year, is seen as being a major beneficiary of the recently announced federal plan to freeze the interest rates on some subprime mortgages as well as allow local governments to fund refinancing through tax-exempt bonds.

Both of these announcements are good news for Countrywide because it not only has significant mortgage portfolio holdings, which desperately need strengthening in the wake of rising foreclosures, but is also the major player in the mortgage origination industry and will greatly benefit from an increase in perceived housing market strength.

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Principal Financial Group (PFG)
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United Rentals Inc. (NYSE:URI) shareholders may be in for a ride after SuttonBrook Capital Management disclosed a 5.83 percent stake in the company and announced that they may hold discussions with management, other shareholders or possible acquirers regarding a potential sale of the company. Many shareholders are still looking for an exit after the company's failed merger attempt with RAM Holdings (NDAQ:RAMR).

RAM Holdings and RAM Acquisition, subsidiaries of private equity giant Cerberus Capital Management, backed out of their planned $4 billion acquisition of United Rentals in November. United Rentals subsequently filed a lawsuit to force Cerberus to follow through with the buyout, since the firm gave no justifiable cause for terminating the deal. Cerberus contends, however, that they are only required to pay the $100 million breakup fee without reason.

SuttonBrook announced today that it would be in talks with interested parties regarding a possible merger, reorganization or liquidation of the company, sale of assets, material changes to the company's business structure, or changes in the board of directors, among other considerations. Many shareholders are hoping that other interested parties would be willing to make a bid or the company at or above the price that Cerberus was prepared to pay.

In the end, it is uncertain as to whether or not anything will become of this, but there are certainly many wildcards in play. Combined, these factors make URI a stock that is definitely worth watching over the next few months!

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