bloggingbuyouts

After a last-minute bid to snatch GPS map info provider Tele Atlas (AMS:TA) from competitor TomTom (AMS: TOM2), Garmin (NASDAQ: GRMN) has dropped out of the bidding, according to Bloomberg. The company had jumped TomTom's friendly takeover offer of under $30 a share with a bid of $35.48. TomTom then responded with a jump to $43.44, or $4.2 billion, an 81% premium on the stock at that time.

This was apparently too rich for Garmin's blood. With Tele Atlas, a premier vendor of GPS map data, in its fold, look for TomTom to expand its family of GPS-specific devices as well as licensing the data for other technologies such as cell phones. Since TomTom was already a Tele Atlas customer, that portion of its expenses will now remain in-house, as well.

Tele Atlas is one of only two large providers of this data. The other, Navteq, was recently purchased for $8.1 billion by Nokia (NYSE: NOK). Garmin, a Navteq customer, just extended its contract with that company for another six years.

The deal would have made sense for either company, but the question is, at what cost? Perhaps the fact that both TomTom and Tele Atlas are based in Europe will help them streamline operations and thereby justify the expense. With the pace of evolution in this market, though, the time frame to leverage the purchase is not long.

Chalk up another victim of the evaporation of cheap credit. Yesterday Nelson Pelz's Triarc Co., the front runner in the race to buy Wendy's International (NYSE: WEN), announced it had offered $37-$41 per share, well below the price it was prepared to pay last summer when its interest was first revealed.

Another factor suppressing the price is word in The Wall Street Journal (subscription required) earlier this week that another suitor, William Foley, along with several investment funds, had decided to pass on the opportunity. This leaves only one known competitor for the company, David Karam's Cedar Enterprises, which owns 134 Wendy's restaurants.

Apparently, Pelz was not enthralled by the company's slightly better than expected third quarter, or perhaps he took to heart Wendy's CEO Kerrii Anderson's concern that the "headwinds" of rising commodity prices could hamper the company's ongoing cost reduction initiative.

After a burst of market enthusiasm over the sale possibility drove Wendy's stock as high as 42.22 this summer, it has dropped again to the doldrums of the low $30's. It fell further on today's news.

In 1917, the Swedish government created a company with a monopoly on the alcoholic beverage business within its borders. The company, V&S Group, is still owned by the government, making internationally known brands such as Absolut. Now comes word that the Wallenberg family, through its public holding company Investor AB, is interesting in buying the firm, for as much as $6 billion.

The Wallenbergs are major holders of many of Sweden's largest companies, including Ericsson, ABB Ltd. (NYSE: ABB), Scania, SAAB, Husqvarna and Electrolux (OTC: ELUXY). Investor had a rough third quarter in 2007, posting a loss of $1.21 billion, attributed to the liquidity problem in the global credit market. It apparently hasn't quenched the family's thirst for new properties.

Investor is not the only suitor for V&S, though; industry giant Diageo (NYSE: DEO), which makes Smirnoff vodka, has already taken a tasting and found it worthy of further consideration.

Investor's deal would be made as a joint bid with the private equity firm EQT, of which Investor is the largest shareholder. Investor's net asset value at the end of the third quarter was around $24 billion.

V&S reached almost $1.6 billion in sales in 2006. It has 2,500 employees, and makes wines, Absolut spirits and other distilled products.

According to Business Week, Ford (NYSE: F) brands Jaguar and Land Rover have captured the interest of Indian private conglomerate Tata Group, owners of Tata Motors (NYSE: TTM). India's largest car manufacturer is reported considering a bid for the legendary British brands, hoping to market them internationally and reduce its dependence on domestic sales. The well-heeled Tata Group includes Tata Steel, the world's fifth largest steel company, which recently concluded a $12 billion takeover of Britian's Corus Steel.


Tata Group owns 96 companies, employs over two million people and has a market cap of over $50 billion. Tata Motors has been building cars since 1945, with revenues of $5.5 billion in 2006. In 2004, it acquired Daewoo Commercial Vehicle Company, and owns a stake in Spanish bus manufacturer Hispano Carrocera. The company has stated its intent to bring to market a $2,500 car to emerging markets by next year.

Buying Jaguar and Land Rover would do more for Tata than give it international access; it could lend the company the credibility to gain immediate acceptance in the burgeoning vehicle market worldwide.

In another lap tray to the belly, customers of Milwaukee-based Midwest Air Group (NYSE: MEH), repeatedly named as one of the nation's best airlines for customer service and comfort, learned today that the airline will be purchased by a group led by TPG Capital. The investor group includes Midwest's competitor Northwest Airlines (NYSE: NWA), which is reviled by passengers for its cattle-car seating, lack of timeliness and failure to understand the concept of customer service

The acquisition offers little in the way of synergy to the two airlines. They duplicate many routes, and Midwest flies the Boing 717, while Northwest uses 747s and 757s. What the deal does accomplish is to block the expansion of a potential competitor in Northwest's upper midwest routes. While the deal secures the present management of Midwest, I suspect it's just a matter of time before the malaise reaches Milwaukee.

Midwest has been fighting off suitor Airtran Holdings' (NYSE: AAI) hostile takeover attempt, which reached $15.75 and $389 million before it folded its cards late last week. TPG, which grew out of the Continental Airlines (NYSE: CAL) takeover in 1993, is offering $16 per share, or over $400 million, to take the company private. The Midwest board voted Sunday to go forward with the TPG offer, and an agreement is expected by midweek.

In a move to divest itself of products inconsistent with their goal of "centering on convenience, wellness and quality," Campbell Soup Co. (NYSE: CPB) is prepared to put its boutique chocolate brand Godiva Chocolatier on the market.

The luxury product should find an eager market, as it has been a solid performer for Campbell with sales increasing by double digits in 2006 on annual sales of approximately $500 million. The company has over 270 retail locations as well as direct sales, and its products are also available in groceries and other stores.

Godiva was founded over 75 years ago in Brussels, Belgium by the Draps family. Campbell's bought a third of the company in 1966, subsequently taking over ownership. They have deftly kept the brand separate from the Campbell's brand, shaping the Godiva image as a gourmet product and haute culture indulgence.

According to The Wall Street Journal [subscription], market analysts speculate that Godiva could bring between $750 million and $1 billion. Centerview Partners LLC has been retained as the financial advisor for the deal.

McDonald's (NYSE:MCD) took another step in narrowing its focus to its core business yesterday, announcing the sale of its Boston Market business to private equity firm Sun Capital Partners, Inc. The company did not divulge the sale price.

McDonald's purchased the chain in 2000, when aggregation was the hot button in the industry, for $173.5 million. Boston Market currently has $180 million in assets and $89.1 million of liabilities.

The move makes senses for both parties. Much like its earlier divestiture of Chipotle Mexican Grill (NYSE:CMG), cutting Boston Market loose will free up more cash for McDonald's to reinvest in growing the mother ship, and will further eliminate distractions to its strategic plan.

For Sun Capital Partners, the expertise gained by the management of its other holdings in the restaurant industry, including Real Mex, Bruegger's Bagels, Fazoli's, Garden Fresh and Souper Salad, should aid it in maximizing the value of the Boston Market brand.

According to Woman's Wear Daily, Kohlberg Kravis & Roberts is partnering with Goldman Sachs Group Inc. (NYSE: GS) to make a $24 billion offer for struggling retailer Macy's Inc. (NYSE: M). The former Federated Department Stores, which adopted the better-known Macy's name in 2005, has 825 stores and $27 billion in annual sales.

KKR is said to be offering $52 a share for the stock, which has been creeping up on rumors of such a deal, to its current $43.12. The Wall Street Journal is among those openly speculating that one driving force behind this deal is KKR's plans to offer an IPO later this year. However, such a deal boosts their offering only if the market buys into the value of Macy's, which has struggled to establish consistent earnings since leaving bankruptcy in 1992.

Woman's Wear Daily interviewed market analysts who voiced skepticism that Macy's current management would welcome this offer. Given current concerns that private equity money could dry up as lenders tighten up in the aftermath of the housing mortgage collapse, I suspect Macy's stockholders won't be prone to wait for another suitor.

Is it a good deal for KKR? Given Macy's portfolio of prime real estate and legendary brand, this deal seems like one with very moderate risk and substantial potential reward.

According to The Global Language Monitor, there are 988,968 words in the English language. Yesterday Answers Corp. (NASDSAQ: ANSW) paid $100 million for Lexico Publishing Group LLC, owners of the internet's most used dictionary, Dictionary.Com, Thesaurus.com and Reference.com were also included in the deal. The company will sell off $140 million of its stock to cover the cost of the purchase.

Answers Corp. is attempting to become the go-to advertising-supported free reference site on a far-flung body of topics from Supreme Court decisions to Bible lexicon, company histories to travel guides. To differentiate themselves their strategy is to aggregate branded, authoritative, content from companies such as AccuWeather, Thomason Gale, Britannica, and Barron's.

They are also pursuing the user-generated content market that Wikipedia established with their recent purchase of Wikianswers.com. In total, Answers.com averaged 4.86 million queries in the first quarter of 2007, from which they realized revenue of $2.9 million and a GAAP loss of $303 thousand -- not a great foundation for a $100 million purchase.

Dictionary.com and its ancillary brands seem like a perfect fit for the company's strategy, though. The overriding question is the validity of this strategy. While the notion of driving people to a web site for one piece of info is so 2006, Answers Corp. seems like the perfect company to take advantage of widgets to extend their market presence, and the value of baseline domain names such as these should remain high.

Among their other products is one I particularly like, 1-click Answers. This add-on to my browser allows me to alt-click on any word on a web page, opening a pop-up containing the definition/explanation of the word/term.

The market didn't think much of the purchase, though, dropping, descending, draining, dribbling, leaking, oozing, seeping and tricking down $1.60 in yesterday's trading.

Perhaps The Donald should assign some of his interns to price out the value of Trump Entertainment Resorts, Inc. (NASDAQ: TRMP). It seems, according to the Philadelphia Enquirer, that his asking price of $22 a share is double what the prospective buyer is willing to pay.

In an analysis that would deflate the ego of a lesser man, Bear Stearns (NYSE: BSC) recently placed a fair-market price of $11 on the stock, which is trading modestly above that level. Trump Entertainment Resorts, which owns casinos in Atlantic City, is thought to be very vulnerable to new gambling venues in development in New York and New Jersey. Earlier this month, CEO James Perry was forced out due to his lack of support for the rumored sale to Dennis Gomes and JEMB Realty Corp.

The disconnect between Trump's expectations and the market's valuation of the company has a couple of troubling aspects. Given the sweet deal Harrah's Entertainment recently penned with Apollo Management and Texas Pacific Group, Trump's paltry valuation makes even more obvious its shortcoming. And since the company hired Merrill Lynch & Co. (NYSE: MER) to help craft a deal, I have to wonder who is avoiding a reality check here.

Trump Entertainment is in a precarious position to turn down a legitimate offer, but the spread between the two positions could well prove as impenetrable as The Donald's coiffure.

How many phone numbers do you have? Too many? A rumor currently circulating has Google Inc. (NASDAQ: GOOG) shopping for an e-company, GrandCentral, that can help you with that problem.

GrandCentral is a very cool, free service, accessed via the Internet, that provides you one phone number that consolidates all of your phone numbers and routes calls to the device of your choice. With this number, you can block nuisance callers, listen in on their messages as they leave them (sneaky, eh?), and receive e-mail or text message notification that you've received a message.

It can automatically route Grandma's calls to your home phone, client calls to your cell, and calls from your good-for-nothing nephew to your fax machine. It also provides a voice mail box that will store messages in perpetuity and allow you to post them to your blog. (That could provide some interesting listening.)

This app seems like a perfect fit for Google, with its cross-platform features. As a one-stop shop for telecommunications, it would integrate beautifully into Gmail and Google's version of Instant Messenger. And since the company has been cruising Silicon Valley looking for investors, the time seems ripe for such a deal.

If you are interested in signing up for a GrandCentral account, you might want to run the available numbers through Phonespell to find one that produces an easily-remembered word or word combination.

Kirk Kerkorian's Tracinda Corp. has dropped its attempt to cherry-pick MGM Mirage's Bellagio and CityCenter properties after the corporation announced a new deal with Bahamas casino owner Sol Kerzner to build a multi-billion dollar casino complex on the Strip in Las Vegas.

Many thought that Kerkorian's intention was to nudge MGM Mirage (NYSE :MGM) onto the sale block, to see what his 56% of the remaining company assets might fetch in a buyout-friendly climate. The latest deal, with its implications for increased debt and holdings value, apparently caused him to rethink this move, at least for the moment.

MGM Mirage already has a huge footprint in Las Vegas, but remains very aggressive (i.e. carrying a considerable debt load) in pursuing further growth. Its new $725 million Detroit casino is scheduled to open late this year. The CityCenter complex in Las Vegas has tied up $7.4 billion and won't be ready until 2009, and MGM has put another $1 billion into a cooperative venture, MGM Grand Macau, opening later this year. It is also in talks about another huge development on the Cotai strip in Macau.

Those punters who jumped on the bandwagon at the initial announcement of Kerkorian's interest in Bellagio are jumping back off this morning. MGM Mirage stock was down more than 10% in early trading.

MySpace, owned by News Corp (NYSE: NWS)'s Fox Interactive Media, has become the largest social networking spot on the internet, and the company is taking steps to keep it that way by purchasing the photo-sharing site Photobucket for a reported $250-300 million.

Up until now, in order for MySpace users to embed photos and videos into their space, they had to first post that content on outside sites such as Photobucket and YouTube, then embed links to it. Photobucket holds a dominant share of that photo-sharing market (41%) and over 40% of the links to its content comes from MySpace users.

A couple of weeks ago, Fox Interactive Media (FIM) began to block content from Photobucket, accusing it of encouraging MySpace users to embed Photobucket-hosted content that carried an accompanying advertisement. If this was a negotiating tactic, it didn't seem to drive the price down much; News Corp is rumored to have dropped $250-300 million for the site.

The move will allow FIM to keep MySpace customers within the family fold as they upload content, thus avoiding the possibility that while on the Photobucket site they might be lured to try a competitor to MySpace.

FIM also announced a smaller deal to buy Flektor, a site that allows users to prep better user content by editing and mashing up their photos and videos.

While their initial plan is to maintain separate identities for the companies, I'd expect FIM to eventually fold both companies into the MySpace family to create a seamless one-stop shop. It also now has the opportunity to market MySpace to the reported 30 million people that visited Photobucket in March.

While the price paid seems steep, the race to integration has become a sprint, and all the big rollers have bought into the game. It's not a market for the thin of wallet or faint of heart.

CBS Corp. (NYSE: CBS) took another step into the internet world yesterday with its $280 million purchase of online social networking/music site last.fm. This follows last week's acquisition of the internet stock market show WallStrip.

last.fm acts as both a music guide and internet radio/music distribution site. Members allow the site to track their PC/iPod listening habits, and the site customizes streamed content of new music matching their tastes. last.fm also allows artists and labels to upload new music (with accompanying permissions), so they can (hopefully) build a following.

The UK-based site began five years ago, and now claims 15 million members.

CBS still owns the largest radio network in the U.S., and I'm interested to see if and how they might integrate last.fm into this business. The two seem to be, to some extent, competing technologies, one in decline (radio), one ascendant (internet). The sale came as a surprise to some pundits who had speculated Viacom (NYSE: VIA), until recently part of the CBS empire, was prepared to offer as much as $450 million for last.fm.

last.fm could provide CBS with a valuable platform for distributing content and a channel to retain advertising flowing to the internet. However, at present, no one site clearly dominates the music networking world. While CBS now has a seat at the table, the fight for ears and eyeballs will continue to grow more interesting.

Stockholders have approved the long-planned acquisition of gaming giant Harrah's Entertainment (NYSE: HET) by Apollo Management L.P. and the Texas Pacific Group. Two-thirds of voting shares agreed to the $90-per-share purchase price, which was recommended by Harrah's board. The final price was $6.19 more than the stock's closing price on March 8, the cutoff for inclusion in the deal.

In the $17.1 billion buyout, TPG and Apollo take on $10.7 billion in debt. Paying down this debt will overshadow any expansion plans for the future.

A number of regulating agencies in areas where Harrah's operates have yet to review and approve the deal. Harrah's expects the deal to be completed by year's end.

Harrah's, by revenue the world's largest casino company, has facilities in the U.S. and around the world, including some of Las Vegas' prime properties.

For more about Apollo, see Tom Taulli's article in BloggingStocks.com.