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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Dendreon (NDAQ:DNDN) shares rocketed $2.72, or 40.36%, to $9.46 in early trading today after the company received confirmation that the FDA will accept either a positive interim or final analysis of survival from its ongoing IMPACT study to supplement the Biologics License Application for Provenge. We began covering this story on May 21st when we noted the widespread support for the drug from doctors and patients alike. The problem was that the FDA said it would delay the approval of the drug for some time - which could signal trouble for investors. Perhaps the FDA felt the heat from supporters or simply changed its mind, but regardless this latest press release is very bullish for the company.

Today's news that the FDA will accept a final analyiss of survival to supplement the BLA for Provenge indicates that they may significantly reduce this delay. Obviously, if the delay is reduced or eliminated and Provenge is approved for use, it would mean significant share appreciation for investors in DNDN. The drug targets a large underserved market that could generate substantial revenues over the long-term and perhaps even make the company a takeover target for a larger pharma player. Combined, these factors make DNDN a stock that is certainly worth watching!

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Jo-Ann Stores (NYSE:JAS) moved up $0.99, or 3.29%, to $31.05 today after the company announced positive earnings for the quarter. The specialty retailer announced a net loss of $0.07 per diluted share compared to $0.28 per diluted share a year ago. Same-store sales - or comps - increased 1.8% this quarter compared to a loss of 3.9% a year ago.

Investors are also carefully watching the bidding process for the company, which may end up topping $1 billion. The group of bidders reportedly consists of middle-market private equity firms including Leonard Green & Partners and Freeman Spologi & Co. There are also reports that larger firms like Blackstone may be looking at the company. Final bids, however, are expected to be in by June when Lehman Brothers will then evaluate them along with the board of directors.

But just how much could the company fetch? Well, the company's improving margins and growth prospects may certainly increase the final bidding price. The company's main competitor, Michael's Stores, was also recently acquired for 12.8x EBITDA and a 30% premium to the stock's closing price on the day it announced that it was exploring strategic alternatives. These metrics seem to confirm the fact that the Jo-Ann could fetch a nice premium. This makes JAS a stock worth watching!

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ESS Technology (NDAQ:ESST) shares rose over 8% this week after Riley Investment Management disclosed a 1.3m share stake in the company and expressed their concerns over the company's management and valuation. The company operates in the semiconductor industry and services the consumer electronics and digital media marketplace. These have been the subject of many recent takeover attempts and could be an industry for further consolidation.

Riley believes that the shares are undervalued and that the current restructuring should be expedited with the ultimate conclusion being a liquidation of the company. Ultimately, the activist hedge fund believes that a liquidation of the company could result in a 100% appreciation of ESST shares; however, that value deteriorates every day the company functions in its current structure. The fund is also concerned that the company may make an acquisition that will further deteriorate the remaining equity value. Consequently, Riley will issue one more letter to the company's board describing their position in greater detail while threatening to replace members of the board if no action is taken. Combined, this is great news for shareholders as it could mean a significant increase in value over the short term. This makes ESST a stock worth watching!

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Interactive Brokers Group (NYSE:IBKR) shares plummeted $1.98, or 7.19%, to $25.57 in early trading today after the company released lower first quarter earnings on higher revenues. The newly IPO'd options firm posted net income of 31 cents per share compared to 34 cents per share one year ago.

Why is this so troubling for investors? Well, the brokerage market appears to be extremely hot right now with almost all competitors posting record gains while IBKR was the first to be stalling. The brokerage clearly experienced some of this upside in the market by increasing their trading volume by 40% quarter over quarter but somehow managed to report declining earnings.

Interactive Brokers reported declining revenues from trading gains and other income while interest income and revenues from commissions and fees rose. These numbers suggest that the brokerage raised its fees in order to compensate for lack of bottom-line net income growth - a negative sign to many investors. Whether this is a one-time occurrence or a larger slowdown in the brokerage industry remains to be seen; however, this stock is definitely one to watch.

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Avaya (NYSE:AV) share jumped $1.94, or 14.19%, to $15.61 after reports surfaced that the company is in buyout talks with private equity firm Silver Lake Partners. The Wall Street Journal report also said that Nortel could step up as a bidder, citing people familiar with the situation.

These days private equity buyout rumors tend to dominate the market headlines and separating fact from rumor is imperative to success. So, what facts support an Avaya buyout? Well, the company was already in buyout talks with Nortel just last month, but the deal fell through after the two parties could not agree on the cash/equity deal structure. The company also has strong cash flows and relatively little debt, making it an ideal acquisition in the fast-growing VOIP market. And finally, Avaya also postponed its May 31st analyst conference, which many see as an indication that the company may very well be in buyout talks.

Combined, these series of events along with a WSJ report citing an exact hedge fund as suitor gives some credibility to this rumor. Given the interest by Nortel, this potential acquisition by a financial buyer could be an attempt to take over the company simply to resell it at a higher multiple to larger strategic buyers in the near future. This is likely why Nortel or other strategic buyers could place their own bids to attempt to get the company for cheaper. Regardless, this is definitely a stock to keep an eye on as the situation unfolds!

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Building Materials Holding Company (NYSE:BLG) shares moved up $1.92, or 13.38%, to $16.27 today after Chapman Capital disclosed a 7.4% stake and expressed their concerns over the company's performance. Specificially, the activist hedge fund suggested that the stock's value could best be unlocked through a sale of part or all of the company.

Chapman first noted that while management cannot be blamed for the steep correction in the U.S. homebuilding market, the board's generous reward distribution to management during this downturn should not be overlooked. Equally troubling is the fact that management and the board have very little stake in the company while much of what they do own was granted to them free of charge. This lack of a stake in the future of the company is certainly a cause for concern.

Chapman then argued that the company is undervalued. To unlock this value the hedge fund recommended that the company immediately hire financial advisors to explore selling all or part of the company. After all, the building materials sector is clearly amid a consolidation wave. Chapman has also recently made personal contact with BLG’s peers and leveraged consolidators of the building supply industry, and they can convey an extremely high level of interest from both private equity and strategic building supply players in the acquisition of the company.

Chapman Capital recognizes the unique value of BMHC’s assets, the years and efforts required to assemble and integrate them. As a result, they are not encouraging an inopportune, undervalued sale, but instead a methodical auction timed to consummate into the inevitable cyclical recovery. And this would be great news for the company's shareholders who have suffered since the downturn in 2006!

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Circuit City (NYSE:CC) shares jumped $0.16, or 1.03%, to $15.69 today after an Associated Press story suggested that the company may need a buyout or major management shakeup to recover from recent profit warnings and increasingly intense competition.

Circuit City rejected a $17 per share buyout offer in 2005, instead opting for a turnaround effort that was quenched by a price war on flat screen televisions last year. The price war caused the company to replace 3,400 workers with cheaper labor that ended up hurting sales. Overall, the situation for Circuit City isn't looking all to good with one of its competitors even considering bankruptcy.

So, what are the chances of a buyout? Well, the fact that the company has received a bid in the past for an amount greater than the current market price suggests that it is could be a possibility. Moreover, while some other companies may be cheaper, nobody can match Circuit City's status as the second largest electronics retailer in the United States. Combined with the financial troubles that the company is in, it would not be too hard to fathom a buyout scenario. This makes CC a stock worth watching!

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Wendy's International (NYSE:WEN) shares continued their rise today after its new ad campaign debuted on American Idol earlier this week. The fast food company has been struggling to regain its advertising foothold ever since Dave Thomas passed away in 2002. Now the company is back with a fresh new campaign centered around their new slogan: That's right. Wendy's shares rose the day after the campaign as many investors hoped that it would help boost the ailing chain.

Wendy's also announced last week that the special committee of the board that had been exploring strategic options had retained J.P. Morgan as lead advisor and Lehman Brothers as co-advisor. These moves suggest that the company is beginning to seriously explore some potential extraordinary transactions such as a sale of the company, recapitalization or special dividend. It is also worth noting that activist investors Bill Ackman and Nelson Peltz have been involved in pushing the company towards unlocking value for its shareholders.

Many rumors have surfaced regarding potential bids for the company in the past; however, nothing has been confirmed. Investors do know, however, that the company is actively exploring ways to unlock value while working to increase its brand awareness through a unique new advertising campaign. The results on both of these fronts remains to be seen, but WEN is definitely a stock to watch in the meantime!

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Ditech Networks (NDAQ:DITC) shares dropped $0.24, or 2.87%, to $8.13 after the company announced lower fourth quarter earnings and narrowed its guidance. The telecom equipment provider also received a letter from 5.8% owner Riley Investment Management who suggested ways to cut costs and improve revenues while returning the company's excess cash to shareholders.

The activist hedge fund expressed its concern and outlined a plan to enhance shareholder value in a Schedule 13D filing with the SEC. Since Ditech's public offering, the company has accumulated losses of over $80 million while spending $110 million in stock and cash on acquisitions and $188 million on R&D. Meanwhile, the current enterprise value stands at a mere $114 million (including NOLs), which suggests that many investors don't have much confidence in the company's future.

Despite this bleak past, Riley believes that the company is well positioned for strong cash flows and operating profits as its customer base continues to diversify and expand. The hedge fund's analysis shows that the company could be at an EBITDA run rate of $25 million in the next couple of quarters and as high as $35 million in the near future with continued customer wins. Notably, the company also has $135 million in cash on its balance sheet!

Riley suggested that given their analysis, the company should consider implementing a series of initiatives to improve its fundamentals and return at least $100 million to shareholders through a dutch tender offer between $9 and $11 and a special dividend to return the balance. Moreover, if the hedge fund's projections were overly optimistic in the company's eyes, it should consider simply issuing a cash dividend amounting to $100 million - or $3 per share.

Riley insists that Ditech is at a critical juncture. Shareholders entrusted the company with over $75 million in cash during its IPO at $11 per share and a secondary at $50.75 per share. Since then, the company's stock has declined 84% in eight years as VCs unloaded and insiders kept their exposure limited. Now, the company's fundamentals seem to be improving while a new CEO is stepping in that better understands the company's obligations to shareholders.

Riley also noted that they may seek board representation and have done so in the past with great success. Combined, these factors make DITC a stock worth watching closely over the next few months!

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Packeteer Inc. (NDAQ:PKTR) shares moved up $0.26, or 2.73%, to $9.77 today after Elliott Associates disclosed a 6.3% stake in the company and communicated their belief that the board of directors should be directing their attention to a prompt sale of the company.

The activist hedge fund reasoned that the company had failed to adequately perform and therefore should be sold in order to unlock value for shareholders. In particular, Elliott Associates noted that the company possesses a leading technology in one of the fastest growing segments of the networking market but has been unable to capitalize on this advantage.

The hedge fund also noted that the market segment in which the company operates is becoming increasingly competitive and therefore it may be prudent to sell while valuations are still high. Moreover, there are probably many parties that would be interested in bolstering their products and services with the market leading technologies possessed by Packeteer.

Combined these factors would make PKTR an attractive target for potential suitors if the company was shopped by the board of directors. And obviously, any buyout would come at a substantial premium to the current market price making this stock one worth following!

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Dell Computers (NDAQ:DELL) shares moved up after the company announced that it would begin selling two two Dimension desktop models in 3,000 WalMart stores in the U.S., Canada and Puerto Rico beginning on June 10th.

The news marks the end of Dell's signature direct-sales policy that marked its success for the past decade. Michael Dell, the company's founder and CEO, noted that direct model has been a revolution, not a religion. The move towards retailing some of its computers is only the "first step" in a larger strategy to help the ailing computer maker to turn itself around.

The change also marks one of the more dramatic changes by founder Michael Dell after he took the reins from former CEO Kevin Rollins who oversaw declining sales and margins. Many analysts and investors are hoping that this move will help the company improve its sales and bolster its earnings. Whether or not this strategy will succeed remains to be seen; however, such a dramatic move definitely makes DELL a stock worth watching!

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Toll Brothers (NYSE:TOL) reported devastating results for their fiscal second quarter amid a housing market that continues to struggle. The home builder's earnings fell from $174.9 million to $36.9 million while its revenues sank 23% to $1.17 billion. Toll also suffers from a high cancellation rate of 19%, a 40% decline in contracts, increasing unsold inventory and a backlog that decreased by 32%. These numbers paint the picture of a housing market that continues to struggle to gain foothold and engineer a turnaround.

Toll Brothers also announced that it was so uncertain about future revenues that it will not make an earnings forecast for the rest of the year. CEO Robert Toll only said that, "We continue to operate conservatively in the current difficult market. In what generally remains a soft market, there are glimmers of strength in certain territories."

Some analysts and investors were hoping that last week's rise in the mortgage applications index would provide a boost to the company's earnings. Most analysts polled pegged the company's earnings this quarter at $0.25. However, the company's earnings ended up at $0.22 as many now believe that the rise in mortgage applications is simply the result of more strict regulations - that is, more people were being rejected and reapplying.

These results are also bad news for other homebuilding and related stocks including Home Depot (NYSE:HD) and Lowe's (NYSE:LOW). Analysts were expecting these companies to turn around in the second quarter; however, the results posted by Toll Brothers suggests that the market has a long way to go before any meaningful recovery. Regardless, this is definitely a sector to watch as we wait for the housing market to report a turnaround in demand.

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Alcatel-Lucent (NYSE:ALU) shares rose $0.38, or 2.78%, to $14.04 today after the company indicated that its restructuring efforts remained on track. The telecom equipment company announced an improving order book following an intense effort in the first quarter to bring clarity to the company's sales force and customer base. The news follows the company's merger disruptions and costs.

Douglas McIntyre at 24/7 Wall St. also suggested that the company could be a takeover target for Motorola or Nortel. Why? Well, these new numbers suggest that ALU is either taking business from these two rivals or the telecom equipment sector is improving. Even if the latter is happening, any acquisition would take some pressure off of MOT management to improve their handset business. While this is a possibility, there is no reason to believe it would happen at this point.

Overall, the Alcatel-Lucent is a company that is quickly recovering through its restructuring efforts. Meanwhile, its telecom equipment industry appears to be improving which should also help the company's margins and growth. Combined, these factors make ALU a stock to watch over the next few months!

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PDL BioPharma (NDAQ:PLDI) may face more shareholder scrutiny after activist hedge fund Third Point blasted L. Patrick Gage's response to their previous letter and expressed their concerns over the company's "woefully unsatisfactory" answers to the hedge fund's questions during a conference call on the same day. Moreover, the hedge fund's continuing investigation into the company's management and board members have uncovered more serious issues that must be addressed.

Third Point first contacted the company two weeks ago (read article) and demanded that the company (1) terminate Mark McDade's employment as CEO, (2) add three shareholder representatives to the company's board and (3) retain an investment bank to explore strategic alternatives. Moreover, based on their continuing investigation, they now also demand that the company remove Mr. Gage and Jeanmarie Guenot from their positions within the company.

Third Point has uncovered several ethical problems within the company's board and management that must be addressed in order to ensure that the company can move forward unencumbered with ineffective and/or detrimental management. These problems were uncovered during interviews with dozens of ex-employees, industry peers, industry analysts and former employers of key management personnel that are being investigated.

The hedge fund's investigations began with Mr. McDade, who has reportedly committed several ethical violations by putting his own interests ahead of the company's interests. Subsequently, the hedge fund discovered that the circumstances surrounding Jeanmarie's rise up the corporate ladder are also plagued with ethical violations. These two key personnel have led to key scientific personnel leaving the company and an ever-expanding list of expenses. Combined, these factors are significantly affecting shareholder value.

The company responded by saying that Third Point's issues with the board and management would be discussed with the entire board, who would then make a decision on behalf of shareholders. However, the hedge fund is now concerned that Mr. McDade and Dr. Gage (the CEO and Chairman) are not accurately conveying the hedge fund's concerns to the board; rather, they are helping eachother remain in power by hiding the story from the other half of the board.

Third Point contends that these issues can only be solved by ridding the board and management personnel that are causing the problems, strengthening the board with additional shareholder representation and hiring an investment bank to help the company explore strategic alternatives to assist shareholders in unlocking the value concealed for so long by management. Whether or not this materializes remains to be seen, but this fight is definitely one to keep an eye on!

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Cadbury Schweppes' (NYSE:CSG) U.S. beverages business may receive significant interest from twelve private equity firms, according to an article in the Wall Street Journal. The first major group of contenders consists of Blackstone, KKR and Lion Capital while the second is composed of Bain Capital, Texas Pacific and Thomas Lee. It is uncertain whether the other six firms interested are considering joining a consortium or plan on placing individual bids.

Cadbury expects the beverages division to draw more than 8 billion that it would return to shareholders via a share buyback or special dividend. The move would unlock significant value but would not preclude the company from making acquisitions of its own, as the company has a strong balance sheet and could easily raise an additional 10 billion if needed.

Cadbury, without its beverages division, would be the largest confectionery group in the world and could work to increase its already-dominant position. This is good news for the long run, but may hurt the share price in the short term depending on the terms of any acquisitions. Consequently, this deal could turn out to be a mixed bag for shareholders in the short term.

While the company was quick to note that the decision to put the division up for sale has not been officially announced, CSG is definitely a stock to keep an eye on given the significant interest by private equity!

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Texas Pacific Land Trust (NYSE:TPL) shares opened even today after Mercury Real Estate Advisors disclosed an 8.1% stake in the company along with a letter to the board of directors in a Schedule 13D/A filing with the SEC. The Connecticut-based hedge fund asked that the company increase its buyback program and split its sub-shares on a further 10 for 1 basis in order to further unlock value for shareholders.

Mercury expressed their disappointment that the company only repurchased 3,800 shares in the first quarter of 2007 - a number that pales in comparison to the company's 9,000 share quarterly average between 2005 and 2006. This fact is especially disturbing given the fact that the company has $8 million in cash, $2 million in quarterly profits, and notes receivable of over $20 million. Spending only $6 million of this cash would result in over 28,000 shares repurchased!

Mercury also expressed their concern over the TPL's high share price. The stock is currently trading at $209 and has reached a high of $249 earlier this year. The hedge fund believes that the company should split the stock on a 10 for 1 basis to bring the shares to a more affordable $22 to $25 range. This would result in greater liquidity, which would be beneficial for all shareholders.

Overall, Mercury is confident in the company's overall business plan and valuable assets but believes that the stock price could be supported through these two measures. If the company institutes these changes, it could significantly enhance value. This makes TPL a stock worth watching!

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Dendreon Corporation (NDAQ:DNDN) shares moved up $0.27, or 4.42%, to $6.34 today after the company announced new study data on Provenge at the American Urological Association on Sunday. The company's board also agreed to layoff 40 workers in an effort to reduce its cash burn rate while it works towards FDA approval. The news comes after an extremely volatile couple of months for the company, whose shares ranged between $3.57 and $25.25.

The new study data on Provenge was disclosed in the abstract "Advanced Prostate Cancer Patients who Receive Sipuleuc-T followed by Docetaxel Have Prolonged Survival" authored by Daniel Petrylak, MD. According to Petrylak, the results of the 82-patient study have suggested that the use of Provenge as a first-line treatment followed by chemotherapy docetaxel upon disease progression may provide patients with substantially prolonged survival benefits.

Dendreon also has strong support from patients who have begun lobbying the FDA to get Provenge approved. In fact, a small group of prostate cancer patients are meeting the FDA Commissioner during the next few months to discuss the matter. Meanwhile, they have setup ProvengeNow.org in an effort to attract further interest from patients to help their cause.

Many doctors that attended the American Urological Association's meeting today (during which Provenge was supposed to be launched) also indicated their disappointment. Many of their patients had been anticipating the new drug and were extremely disappointed when the FDA decided to delay their ruling by several months to a year. Whether or not any of these efforts materialize in the form of a quicker approval remains to be seen; however, DNDN is definitely a stock with great upside potential once Provenge hits the market. Combined, these factors make DNDN a stock worth watching!

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Alltel Corporation (NYSE:AT) shares moved up $4.70, or 7.21%, to $69.91 today after the company received a $27.5 billion buyout offer from TPG Capital and Goldman Sachs Capital Partners. The $71.50 buyout comes after speculation that we recently noted in our article All Eyes on an Alltel Buyout. The premium represents a 9.6% premium to Friday's close and a 23% premium to the stock's price before buyout speculation first began in late December.

This price is likely to be viewed by shareholders as too low given the high premiums seen in other recent buyouts. Over the last six months, Alltel shares are up 15% while competitors Verizon and AT&T moved up 20% and 25%, respectively. In fact, even after the buyout Alltel shares will only be up 4% over the past 52 weeks! And finally, Alltel's strong cash flows and unique market position give it a very competitive stance as the 5th largest wireless provider in the United States.

So, is the buyout too small? Well, it is worth noting that Alltel's valuation before the buyout rumors was already significantly higher than its peers. The company's PEG (PE/Growth) ratio stands at a high 2.90 while it trades at just about enterprise value. In the end, it is uncertain whether or not the company will receive a higher bid, but AT is definitely a stock to watch in the meantime!

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aQuantive, Inc. (NDAQ:AQNT) shares jumped over 77% today after Microsoft Corporation (NDAQ:MSFT) agreed to purchase the company for about $6 billion, or $66.50 per share. The buyout price represents an amazing 85% premium over Thursday's $35.87 close!

The large offer reflects the increasing competition between the large Internet companies in the lucrative online advertising marketplace. Many investors pegged aQuantive or ValueClick as potential takeover candidates after Google's acquisition of DoubleClick and Yahoo's subsequent acquisition of Right Media.

These transactions leave ValueClick as the only remaining large independent advertising broker, which caused the shares to jump more than 7% despite an investigation into the company that was disclosed today. Some analysts see further consolidation, perhaps by Yahoo to further boost its offerings. Regardless, ValueClick and this entire industry are certainly worth watching!

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Pioneer Bankshares (OTC:PNBI) shares moved up marginally this week after Richard Spurzem disclosed a 5.2% stake in the company and a letter to the company's board of directors. The shareholder suggested that Virginia-based company has limited growth prospects and should put the company up for sale.

What evidence suggests that any sale would be successful? Well, the company operates Pioneer Banks in Virginia and may be attractive to any larger banks seeking to "fill out" their branch footprint in Central and Western Virginia. Moreover, the recent sale of Premier in the upper Shenendoah Valley I-81 corridor and Union Bank's purchase of six branches from Provident.

Mr. Spurzem had requested to meet with management several times and only recently received a response from the company indicating that they would speak with him after the company's next board meeting. Whether or not the company would be open to a possible sale or interested in engaging a financial advisor remains to be seen; however, this is definitely a stock to keep an eye on in the meantime.

Note: This is an OTC stock, meaning that it is not as liquid as many stocks traded on the NYSE, NASDAQ or AMEX. On the flip side, being an OTC company saves million in public company expenses which helps a company with a $24 million market cap.

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Midwest Air Group (AMEX:MEH) and AirTrans Holdings (NYSE:AAI) shares both rose more than 2% today as the companies prepare to battle during Midwest's upcoming annual shareholders meeting over a proposed hostile takeover. The fight promises to be an interesting one since the Wisconsin-based carrier faces strong shareholder support to the merger.

The company revealed today that 56.6% of the total outstanding shares were tendered in favor of the deal; however, they remain armed with a poison pill and a Wisconsin law that allows companies to consider not only shareholders but also all constituent interests when considering a merger. In the end, these ensure that no deal is possible without board support, and that will depend on AirTrans' success on June 14th.

Midwest has also made things complicated for AirTrans even if they do successfully take over the company. The carrier announced a partnership with Northwest today that will add 250 city pairs and more than 1,000 flight options for the customers of both airlines. These new routes will greatly expand routes for Midwest as an independent company but may end up conflicting with AirTrans routes while supporting their competition. Regardless, this is definitely a situation worth following...

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SunTrust Banks Inc. (NYSE:STI) shares continued their move up this week after the Wall Street Journal reported that the bank could become a buyout target now that it has shed its Coca Cola (NYSE:KO) holdings. The company had avoided such talks in the past using its KO holdings as a pseudo-poison pill, but now a sale of the eighth largest U.S. bank doesn't seem so distant from many analysts and investors.

Is there any evidence to support the theory? Well, according to the WSJ, executives at the company maintain that the company can keep going it alone, but outsiders say that evidence is mounting that selling out is an option being considered by directors. In fact, management announced Monday that it sees few acquisition opportunities. Instead, the proceeds of the KO sale will be used to fund a share buyback. Combined, these are all good indications that the company is keeping itself cheap, meaning that an acquisition is definitely not out of the cards. This is definitely a stock to watch!

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BB&T Corporation (BBT)

The New York Times Company (NYSE:NYT) moved down marginally today after reporting April sales 2.2 percent lower on weakness in all of its print media groups. Ad revenues dropped 3.6 percent from $203.4 million to $196 million while total revenues dropped from $303.2 million to $203.4 million. Analysts and investors continue to attribute the drop to an overall decline in the print advertising market as more and more users turn to online sources for their news and information.

This thesis is confirmed when we look at the company's internet sales, which climbed 15.6 percent in all three groups. Moreover, it's About.com segment saw its ad revenues soar 26.6% to $187.1 million. It is worth noting, however, that even these growth rates are much lower than other large web properties. The NYT has the 11th largest presence on the web and if it does not quickly act to extract more revenue and greater growth figures, it may fall behind in that arena too.

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Riviera Holdings (AMEX:RIV) shares jumped earlier this week after the Las Vegas-based company announced that it had began to receive bids in connection with its sale process. The process comes after activist shareholders had pressured the company via a proxy solicitation to take actions to unlock shareholder value.

Currently, a $30 per share offer from a group led by Ian Bruce Eichner and Dune Capital Management is the best bid but there are many other potential bidders. In fact, Flag Luxury - the hedge fund that previously pushed for a sale - said yesterday that their group is currently considering all of its options, which may include making a higher offer than the $30 per share expression of interest that the board announced on May 11th.

Many shareholders are hoping that Flag Luxury will utilize their existing position as largest shareholder as leverage to make a higher bid for the company. Ideally, this could spark a bidding war that could propel the stock significantly higher than $30 per share. And given the M&A in the gaming sector by private equity not so long ago, this may be a strong possibility. Regardless, this is certainly a stock worth keeping an eye on!

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Feldman Mall Properties (NYSE:FMP) shares rose $0.21, or 1.87%, to $11.29 today after Mercury Real Estate Advisors disclosed a 9.5% stake in the company and demanded that the company immediately engage a financial advisor to assist the board in putting the company up for sale.

The Connecticut-based hedge fund insisted that the company continues to trade at a deep discount to its liquidation value, which is being eroded by an ineffective management team that has delivered a total return of only 1.9% for shareholders since the company's IPO. Moreover, the company's G&A expenses are far too high a percentage of revenues to justify the company remaining public - that is to say, significant cost savings could be achieved by any buyer simply by taking the company private or leveraging economies of scale.

Mercury also noted that the company has failed repeatedly to meet routine SEC reporting timetables, repeatedly disappointed on earnings and cash flow projections and recently completed a dilutive financing. These failures are especially embarrassing given the company's relatively straightforward business operations, which entail owning a mere seven retail properties! Consequently, the hedge fund requested a meeting with the board of directors to discuss this dire situation and recommend that the company hire and investment banker to explore a possible sale of the company.

Unfortunately, the board of directors has not been so open to these suggestions to date. In fact, this is the third time that Mercury has sent a letter to the board of directors via a Schedule 13D filing - the other two times being in January and March. Apparently, the company's board and management are more concerned about protecting their own jobs than unlocking value for shareholders - a stance which is not uncommon in today's world. Mercury may be forced to threaten a proxy fight or take further action before any kind of a response can be solicited from the company or board. Regardless, this is definitely a stock to keep an eye on as any sale would come at a substantial premium to the current market price!

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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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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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Wendy's International (NYSE:WEN) shares jumped $2.03, or 5.31%, to $40.26 today after rumors surfaced that a potential bidder for the company has surfaced willing to pay in excess of $50 per share. This comes shortly after the company agreed to explore strategic options amid pressure by activist shareholders.

Billionaire investor Nelson Peltz and famed activist Bill Ackman have both pressured the company to unlock shareholder value through a sale of the company. Wendy's initially complied with the spin off of Tim Hortons in September and the sale of its Baja Fresh chain in November, but the activist investors insisted that this was not enough.

Finally, on April 26th, the company announced that it had created a special committee of directors to consider strategic options, including a possible sale of the company. The move ended a two year campaign by Nelson Peltz's Trian Partners who were successful last year in obtaining three seats on the company's board.

Right now, all of these rumors are unconfirmed. But given Peltz's past success forcing the sale of Baja Fresh and obtaining board seats, perhaps the possibility of a buyout has some merit. Regardless, this is a company that is definitely worth watching!

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Monster Worldwide (NDAQ:MNST) held its gains from a 10% jump last week amid continued buyout speculation. Many journalists and analysts have suggested that the company could be a buyout target for Google, Gannett, Yahoo, or eBay within the next six months. The commonly quoted buyout prices range from the mid-50s to low-60's per share.

The rumors are backed up by strong call option purchases last week combined with an alleged leak of confidential information from a prospective bidder, which reportedly caused the runup. Monster has also been considered an acquisition target for several years as it posted impressive growth numbers with over $1 billion in revenues.

The best suitor is widely considered to be Gannett, who could combine the company with its own CareerBuilder to further solidify its lead in the market. Given the declining margins and reduced subscriptions in the newspaper business, the acquisition would also be a welcome boost to revenues and growth figures.

Meanwhile, Yahoo may be looking for ways to improve upon its revenues, which may slow to below 10% this year. The internet portal already has an impressive online jobs franchise and could quickly become the largest player by purchasing Monster. Despite the large purchase price, Monster's $1 billion in revenues and impressive growth numbers would be a welcome addition for increasingly-discontented Yahoo shareholders.

Of course, nobody can discount Google from the equation as it continues to attempt to diversify its revenues away from purely online search revenues. While the company has no direct synergies, it may be looking to enter the market and is perhaps the best capitalized company to make such a large acquisition.

Currently any Monster acquisition is nothing more than a rumor. However, there is clearly an interest in the company from several large tech players. MNST is definitely a stock to watch in the next year as the situation plays out.

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Glenayre Technologies' (NDAQ:GEMS) management may be in for some serious trouble after activist investor Robert Chapman disclosed a 10% stake in the company and voiced his support for fellow-activist Daniel Loeb, who demanded that the company put itself up for sale last week (read article).

Chapman Capital has been involved with the company for some time now. First, the hedge fund voted to withhold all of its votes in protest against all directors for the company's May 22, 2007 election. Secondly, they are currently suing the company's CEO over an illegal EDC equity option exchange. And now, in a vocal letter to the company, the hedge fund is bringing its fight public while voicing support for fellow-activist Daniel Loeb.

Chapman noted that last week's filing by Third Point was Glenayre's first official warning that its continued siphoning off of value from the company had forced yet another large owner to defend its investment via activist, corporate warfare. It is here that Chapman also said it shares the four stated concerns listed in Item 4, having concluded that what is "clearly best for shareholders" is to "put the company up for sale". He also added, "if by now you have not realized the days of your being paid an annual compensation exceeding $1.8 million for the service of driving Glenayre's owners' collective investment into the ground, it's high time for a reality check."

Chapman also suggested that the company's board of directors read Alan Murray's Revolt In The Boardroom: The New Rules of Power in Corporate America saying, "you may want to take a break from admiring your 2007 Grammy after-party photos to read the entire book, start-to-finish, and then re-read it. Given that Mr. Thomas Costabile, EDC's high paid COO, is carry nearly the entire operational load at EDC, I doubt you lack the free time to read this book cover to cover".

The two activist investors own a combined 17% stake in the company at this time and may increase it before Glenayre's annual meeting. Many investors are hoping that two large, activist investors will be enough to draw a response from management and ideally a move to put the company on the auction block to unlock value. Combined, these factors make GEMS a stock worth watching!

For more background information on Chapman's legal arguments and demands, checkout their Schedule 13D/A filing with the SEC today.

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Alcan Inc. (NYSE:AL) shares rose $20.13, or 32.98%, to $81.14 after rival Alcoa Inc. (NYSE:AA) issued a hostile $33 billion - or $73.25 per share - bid for the company. The deal would create the world's largest aluminum company with annual revenues of $54 billion.

Alcoa CEO Alain Belda commented, "We are very disappointed that those efforts [past negotiations for a buyout] did not result in a negotiated transaction - a conclusion we would have strongly preferred. We believe firmly in the compelling strategic rationale behind the combination of Alcoa and Alcan and are convinced that this transaction creates substantial value for both sets of shareholders and for customers around the world. We are therefore taking our offer directly to Alcan shareholders."

Clearly, the Alcan shareholders are looking for more as shares in the company jumped swiftly past the buyout offer by more than 5%. And if enough shareholders agree, they just might get it. Not only does Alcoa want the company badly, but the merger's cost savings and resulting superior market position may justify a higher price.

The merger would generate a pretax cost savings of about $1 billion annually after three years, with 25% of that in the first year. Moreover, Alcoa plans several divestures in overlapping business segments - such as aerospace - which could help generate more immediate return on investment.

While Alcoa managers have suggested that they are confident the transaction will be approved, shareholders are still apparently banking on Alcan's board to reject the offer in hopes of something higher. Whether or not this happens remains to be seen, but this is definitely a stock to watch!

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Reuters Group PLC (NDAQ:RTRSY) shares moved up $15.08, or 25.59%, to $74 after the company confirmed a possible takeover bid. The Globe and Mail newspaper in Canada identified the bidder as Thomson Corporation - a private financial data provider.

Chief Executive Officer Tom Glocer said he could say very little about the approach, except that his company was considering the proposal and the board would be guided by what is in the best interest of Reuters and its stakeholders and employees.

What is the current offer? Well, The Financial Times reported on its website today that an unidentified "usually knowledgeable source" said that Thomson had offered 600 pence ($11.94) per share for the company, valuing it at $15 billion. However, Reuters is reportedly only considering offers above 750 pence. Currently, shares of the company are trading around 615 pence - or $12.24 per share - above the reported buyout bid.

This is definitely a situation to watch as the financial news and information businesses continue to receive bids. The Wall Street Journal bid is reportedly being rejected while Reuters is also reportedly holding out for more. Obviously, management and investors believe that businesses in this sector are undervalued and worth more. Either way, RTRSY is definitely an ADR worth watching!

Yahoo! Inc. (NDAQ:YHOO) shares jumped $4.50, or 15.97%, to $32.68 today after reports surfaced that Microsoft Corporation (NDAQ:MSFT) considering a buyout of the search engine in order to better compete with mutual-rival Google Inc. (NDAQ:GOOG). The combined company would more than double Google's market cap and close much the Google's lead in the search business.

The speculation began when the New York Post reported that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth upwards of $50 billion - significantly higher than Yahoo's $38 billion market cap as of Thursday. Meanwhile, the Wall Street Journal is reporting that executives of the two companies are looking at a merger or some other kind of match-up, but cautioned that the talks are still in early stages.

The idea shouldn't come as that big of a surprise to investors - it's happened before! The two companies explored the idea of combining last year but the talks led nowhere. Now, both companies are feeling the pressure to compete with Google, which recently beefed up its portfolio with its $3.1 billion acquisition of DoubleClick, Inc. Google also won search deals last year with AOL and MySpace, which dramatically increased its lead in the search business.

So, what are the chances of a match-up at this point? Well, it is likely that the two will at least put together some kind of a search agreement in the near-term to compete with Google. Whether or not there will be a full scale merger remains to be seen. However, sources close to the situation also said that Microsoft's latest approach to Yahoo signaled an increased urgency - so we should know something soon!

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Glenayre Technologies, Inc. (NDAQ:GEMS) shares jumped $0.18, or 8.18%, to $2.38 today after Daniel Loeb's Third Point disclosed a 6.3% stake in the company and demanded that the company immediately put itself up for sale.

Daniel Loeb is well known for unlocking value in his funds' investments through shareholder activism. This typically involves authoring letters to boards of directors and replacing them in proxy fights if they do not heed his demands. And it works - his hedge fund has returned an annual average of 28.9% between 1995 and 2005, beating both the market and most other hedge funds!

So, what does he see in Glenayre? Well, the company is currently set on an acquisition-based strategy that Loeb insists will run it into the ground. The company's SG&A spending - which includes executive compensation - is simply too high for a company of its size. The company also has $355 worth of net operating loss carryfowards (NOLs) that can be used to offset future income.

Given the elimination of these costs (along with compliance costs for Sarbanes-Oxley) and the addition of the NOLs' value, Loeb suggests that the company currently trades at less than 2x adjusted EBITDA. This would make it a logical buyout target for strategic or financial buyers at a considerably higher valuation. Consequently, Loeb suggests that the board can best maximize shareholder value by putting the company up for sale.

Whether or not this occurs depends on how close the board is to management. However, if no action is taken, Loeb said at the end of his letter to the board that he would explore all legal and other options to combat them - including removing them from office. This makes GEMS a stock worth following!

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Transocean Inc. (NYSE:RIG) shares added more than 3% earlier this week after the company announced first-quarter earnings that topped analyst estimates. The company attributed the performance to net profits which more than doubled due to high oil and gas prices coupled with flat operational costs.

Transocean's conference call today addressed concerns that their drilling operations are a cyclical business and rig rentals will fall in a year or two along with the stock. A company officer reassured shareholders, saying that there is so much demand for deep water drilling that the current cycle will last well beyond 2010.

The conference call also noted that recent deep water rig rentals from other companies soared to over $500,000 per day - a number well  below what RIG is charging. Obviously, any rise in Transoceans' rates would provide a direct boost to their bottom line. The reality is that oil demand is going up every year while it continues to be a scarce resource.

Meanwhile, the company's fundamentals continue to be attractive. The current P/E to growth (PEG) ratio stands at just 0.46, meaning the stock is extremely undervalued given its growth prospects. The company's forward P/E of 8x also suggests it is undervalued. Combined, these are all factors that make RIG a safe bet in the oil industry for the next few years.

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RadioShack (NYSE:RSH) reported first quarter earnings earlier this week that more than doubled analyst estimates causing shares in the company to rise more than 10% already this week.

The strong report comes despite negative stories out of Barron's and the Wall Street Journal along with a parody in The Onion. So, why is everyone wrong about this company? Well, RSH has recently been restructuring itself by selling off its under-performing stores.

The result has obviously been declining sales, which caused the bearish sentiment we've seen in many financial publications. What many people fair to recognize is RadioShack's gross margins, which have increased from 48% to 52% while its earnings moved from $0.14 to $0.29 per share last year.

The strategy is one that was pioneered by Sears Holdings (NYSE:SHLD) when it moved from $15 to $190 per share during its turnaround. If RadioShack follows the same road, it is likely that analysts will continue to remain bearish on the stock while its same store sales continue to sink. However, investors who are willing to weather this storm and realize the bottom-line improvements will see blue skies. These factors make RSH a stock worth watching closely over the next few quarters!

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Synenco Energy Inc. (TSE:SYN) shares moved up 3.36% today after the company announced that it is conducting a strategic review and has hired TD Securities Inc. and Merrill Lynch Canada Inc. to advise it.

The move to explore strategic options came after the company halted construction of a $4.7 billion refinery upgrade because it was becoming too expensive. The halting of construction may affect Chinese oil giant China Petroleum & Chemical Corp., who invested $119 million for a 40% stake in the project back in May 2005.

The stock caught investors' eyes when the company stated that nothing has been ruled out at this point and that it would consider as many options as possible. These options could include anything from restructuring downstream businesses for economies of scale to an outright sale of the corporation.

Many analysts are pointing to China's Sinopec as the logical buyer for the company at this point given their existing 40% stake in this project. And Sinopec did not deny that they were in talks with the company! More, investors and analysts point to other recent acquisitions in regional oil sands projects like Statoil ASA's recent acquisition of North American Oil Sands Corp. for $1.97 billion. Clearly there is interest in the company!

Whether or not a sale of the company is in the cards remains to be seen, however this stock is definitely one to keep an eye on in the meantime. Any sale of the company could come at a substantial premium to the current market price - even after today's move.

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Cablevision Systems Corporation (NYSE:CVC) shares jumped $2.72, or 8.33%, to $35.39 today after the company agreed to be taken private by the founding Dolan family for about $10.6 billion. We first mentioned the possibility of a raised bid back in early April, where we also suggested other possible targets. The current $36.26 per share offer was an 11% premium to Tuesday's closing price and a 52% premium to Cablevision's price before Dolan's first bid. The board had rejected the family's past bids for the company, that came in at around $21 per share initially, since 2005. The board finally accepted today's bid after careful deliberation with the family.

Now that the heavy investment spending by many of these large cable companies to lay down the groundwork is completed, there is simply strong cash flows remaining for the coming years as their spending declines. This trend led to the buyout of Cox Communications and Insight Communications, which have both recently been taking private by private equity firms and controlling shareholders. Many analysts expect these trends to continue before the valuations of cable companies rise high enough to prohibit such takeovers. And given the multiples we are seeing today, this could be awhile. Two companies to keep an eye on are RCN Corporation (RCNI) and Knology (KNOL), which are both smaller cable operators that have a strong niche presence in their respective markets.

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Dow Jones & Company, Inc. (NYSE:DJ) shares jumped over 50% today after the company received an unsolicited $5 billion, or $60 per share, bid from News Corp. (NYSE:NWS). The move would expand News Corp's reach into business media with the Wall Street Journal and Dow Jones Newswire. While unsolicited, News Corp. insisted that the bid was friendly and the company would not pursue any kind of a hostile takeover of Dow Jones.

It is obvious that Dow Jones is a company that News Corp. wants badly enough that it would bid such a high amount to preclude competitors. Dow Jones investors may be ready for an exit too after the company announced first-quarter profits that fell 63% after revenue at the Wall Street Journal declined. Coupled with a slowdown in the print media industry - which saw newspaper circulation fall 2.1% in six months - the bid should be welcomed by the company's board of directors. However, we'll have to wait and see...

News of the unsolicited bid also sent shares of other newspaper companies up as speculation of consolidation in the industry took over. Gannett rose 5%, the New York Times rose 5% and the Washington Post rose nearly 3%. For now, however, this seems like an isolated incident.

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Agile Software Corporation (NDAQ:AGIL) shares moved up $0.24, or 3.34%, to $7.43 today after the company announced the date of its annual shareholders meeting in a Schedule 14A proxy filing with the SEC. Normally this isn't such big news, but in Agile's case this year's June 20th annual meeting promises to be like no other!

Agile Software has been engulfed in a month-long battle with activist hedge fund manager Robert Chapman, who has been pushing for a sale of the company. And he is not alone - Shamrock Activist Value Fund also voiced its support for the idea along with other large institutional investors.

The two hedge funds are concerned that independent software companies focusing on the product lifecycle management industry cannot compete against their larger rivals. Consequently, a sale of the company may be the only viable option for investors concerned over slow revenue growth and narrowing profit margins.

Agile has reportedly hired Citigroup to help it explore its strategic options, but some investors worry that they may use their large cash position to make an acquisition rather than auction itself off. This is why many large investors are going to be carefully watching the company during its annual meeting this year, hoping to get an idea of where they plan on taking the company.

Meanwhile, Chapman hinted that he would outline his argument for selling the company in a filing with the SEC shortly. We will likely get to see this before June 20th so that it can be discussed during the company's annual meeting. If Chapman and other investors are successful in pushing for a sale of the company, it could mean significant share appreciation. This makes AGIL a stock worth watching!

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Wendy's International (NYSE:WEN) shares jumped over 10% last week after the company announced that it was considering putting itself up for sale. The move comes after billionaire investor Nelson Peltz and former shareholder Bill Ackman pressured the company to boost its stock price. The two first persuaded Wendy's to spin off Tim Hortons, a coffee and doughnut chain, in September and sell its Baja Fresh chain in November. But activist shareholders and finally managed to convince the board that this simply is not enough.

The company still owns a lot of undervalued assets including about half as many locations as McDonald's. Investors argue that there is a lot of money tied up in these assets that could easily catch the interest of a financial buyer or perhaps even a strategic buyer. Financial buyers are attracted to the company's cash flows and real estate, which can be used to repay the debt borrowed to finance the transaction. Strategic buyers may be interested in the large scale of Wendy's operations; however, some argue that it may be too expensive for most strategic buyers. Whether or not a sale actually takes place remains to be seen; however, WEN is definitely a stock to keep an eye on as this situation unfolds!

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