A judge blocks the $285 million settlement between Citigroup (NYSE: C) and the SEC. (Reuters)

Amazon.com (NASDAQ: AMZN) says Kindle sales rose 4X on Black Friday compared to the same day a year ago. (Reuters)

General Motors (NYSE: GM) offers loaner cars to Chevy Volt owners. (Reuters)

Thomas H. Lee Partners may bid for the U.S. operations of Yahoo! (NASDAQ: YHOO). (Reuters)

Some MF Global customer money may have been found in Europe. (Reuters)

Research In Motion (NASDAQ: RIMM) may offer some of its BlackBerry security features on the Apple (NASDAQ: AAPL) iPhone and Google (NASDAQ: GOOG) Android devices. (Reuters)

Aol (NYSE: AOL) says it does not compete with Yahoo!, but still could hire good talent. (Reuters)

Facebook may launch an IPO in the spring that would raise $10 billion and value the company at $100 billion. (WSJ)

Bank of America (NYSE: BAC), Morgan Stanley (NYSE: MS) and other financial firms are in settlement talks with MBIA (NYSE: MBI) over losses incurred during the financial crisis. (WSJ)

Amazon.com’s Kindle emerges as the primary competition to the Apple iPad. (WSJ)

Seagate (NASDAQ: STX) increases its forecast for annual earnings. (WSJ)

Toyota (NYSE: TM), a huge employer in Japan, may move production because of the value of the yen. (WSJ)

The Federal Reserve Bank of New York says Americans cut debt 0.6% in the third quarter, mostly through defaults and debt repayment. (WSJ)

The National Governors Association and the National Association of State Budget Officers say state budget deficits have improved. (WSJ)

The OECD says global growth will slow. (WSJ)

Cyber Monday sales rise 18% by some measures. (WSJ)

Black Friday sales may not help forecasts for the balance of the holiday season. (WSJ)

Summit Entertainment and Lions Gate (NYSE: LGF) are in M&A talks. (WSJ)

Icahn Enterprises (NYSE: IEP) offers to buy Commercial Metals (NYSE: CMC) for $1.73 billion. (WSJ)

The UK will increase its bank levy to raise $3.9 billion. (WSJ)

Nomura Holdings (NYSE: NMR) sharply decreases its exposure to eurozone paper. (WSJ)

Bets against the euro hit a 17-month high. (WSJ)

Tightened credit at EU banks hampers business growth. (NYT)

Silver Lake and Microsoft (NASDAQ: MSFT) may bid for a stake in Yahoo! (NYT)

Tokyo Electric Power Company will sell assets to raise $3.2 billion. (NYT)

The Polish foreign minister says that only Germany can save the eurozone. (FT)

The FHFA Office of Inspector-General says that mortgage companies often press his agency in a way that hurts its financial position. (FT)

Moody’s may cut the ratings of a number of European banks. (Bloomberg)

The Fiscal Policy Institute says most New York State growth since 2008 has come in low-level jobs. (Bloomberg)

Douglas A. McIntyre

What makes this so interesting is that two buyout offers came from The Blackstone Group LP (NYSE: BX) and Carl Icahn’s Icahn Enterprises LP (NYSE: IEP) failed to secure a merger almost a year ago.

The move effectively aims to protect the parent company from shareholders, including Carl Icahn, and appears to be coming at the expense of bondholders.  The company has reached an agreement with holders of more han $1.4 billion in senior notes issued by the Dynegy Holdings subsidiary and it appears to be setting the tone for the restructuring of more than $4 billion of Dynegy Holdings’ obligations. This appears to have no impact on the power generation assets. Where the issues are coming is that Dynegy has restructured and now the parent owns the assets but certain subsidiaries on the hook for the debt in a move obviously meant to protect the parent company in restructuring efforts.

Dynegy shares are up 25% at $3.70 on very active volume and the 52-week trading range is $2.35 to $6.92.

JON C. OGG

Icahn Enterprise was thumped after it made a bid for Clorox, which was rejected. Boeing was hit because large customer American may buy jets from rival Airbus.

Microsoft sold off, probably because of news that smartphone partner is in more trouble

The Flame Index started as a research tool in 2008 at the NY Innovation Design Lab (nyidlab). It was used as a general metric to evaluate companies and their risk in the media. Publicly traded Fortune 500 companies are used as a measure to calculate an overall market of negative news and the companies are ranked within that market

Data and ranking provided by the Flame Index.

The filing shows that Icahn sent a letter to the Clorox board yesterday offering to acquire the rest of Clorox for all-cash at $76.50 per share.  The total consideration comes to $12.6 billion.  Icahn notes that this is a 21% premium to the December 20, 2010 date when Icahn first invested, but the reality is that this represents only about a 10% premium to the $68.43 close on Thursday.

Icahn says that the deal will be satisfied  through $4.8 billion of equity contributions  from  Icahn  Enterprises LP (NYSE: IEP) and its affiliates consisting of 12.5 million shares of Clorox common stock, as well as by $3.8 billion in cash on hand, and $7.8 billion  in financing arranged by Jefferies & Company, Inc. (NYSE: JEF).  Icahn even offered a $100 million fee for the company to accept the deal if he (and Jefferies) fails to raise the funding.

Icahn has also noted that he will accept a “go-shop” provision for Clorox to pursue superior offers.  On a further note, Icahn has said that Clorox is failing to live up to expectations this year and next.  Icahn also noted, “it seems clear to us that there are potentially multiple substantially larger strategic bidders with robust balance sheets who are in a position to make a bid that reflects significant inherent synergies.”

Icahn even went out and named potential strategic acquirers who could generate more synergies than he could as a financial buyer.  The filing points to Procter & Gamble (NYSE: PG), Unilever plc (NYSE: UL), Colgate Palmolive Company (NYSE: CL), Kimberly-Clark Corporation (NYSE: KMB), and even noted companies like Reckitt Benckiser and Henkel AG.

Icahn even goes on to note that this company’s acquisition by a strategic buyer at $100 per share would offer an accretive financial deal for any of the large strategic buyers.

What is obvious here is that Carl Icahn has two angles.  He is going to drive up the value of his holdings in Clorox now, and the second outcome will either be that he will either buy with the hope of reselling the company later or will force another buyer to come in at a higher price.  Clorox has a 52-week trading range of $60.56 to $72.43 and its dividend yield is 3.5% before the effects of this merger.

Icahn can win either way here.  This will juice his shares even higher today on paper, but if he can force another one of the consumer products giants off the sidelines then Icahn wins even more and doesn’t have to raise the capital.

Icahn’s full SEC filing is here.

JON C. OGG

In August 2010, The Blackstone Group, L.P. (NYSE: BX) offered $4.50/share for Dynegy, a price they later raised to $5. The deal included $4.1 billion in Dynegy debt, and was worth a total of about $4.7 billion. Icahn and Seneca Capital both refused to play, so the offer was withdrawn. Dynegy formally went searching for a deal, and the only offer the company got was from Icahn. Seneca, once Icahn’s compatriot, rejected the $5.50/share offer, saying the company was worth $7.50/share. Apparently the shareholders agreed, because Icahn’s tender offer got no action, and was eventually withdrawn.

The disconnect here is between the value of Dynegy’s physical assets and its expected revenues. The company owns nearly 12 megawatts of generating capacity, about half of which is solely gas-fired and another sixth of which can switch between coal or oil and natural gas.

At the time of the Blackstone offer, Blackstone had struck a deal with NRG Energy, Inc. (NYSE: NRG) to sell four of the gas-fired plants with a total of about 3,900 megawatts of generation, to NRG for $1.36 billion. Thus, about a third of Dynegy’s generation capacity was worth $1.36 billion, implying that all of it was worth around $4.08 billion.

When the Blackstone deal fell through, NRG said that because the price of natural gas had fallen so low, the plants it wanted to purchase from Dynegy were actually worth less because the low fuel prices kept Dynegy from raising its price for electricity. The industry lapdogs known as public utilities commissions are not allowing utilities to raise rates because the utilities costs hadn’t gone up. Investor-owned utilities with sizable debt, like Dynegy, are squeezed.

And Icahn knows this. That’s why he wants more Dynegy stock. Dynegy’s generation capacity is worth more than $4.08 billion, but not as long as Dynegy owns them.  Imagine a company with a ‘Going Concern’ note which fits into the same screen for bankruptcy investors, value investors, activist investors, and turnaround managers all at once.  Dynegy has become an investor’s paradox.

Icahn also knows that eventually Dynegy’s bankers, threatened with Chapter 11 restructuring, are likely to return to his offer or something close to it. Icahn can then counter with a restructuring offer that debtholders can’t refuse.

Before the first offer from Blackstone, Dynegy stock was trading at $2.78/share. The 52-week range is $2.76-$8.05, which only demonstrates again that hope springs eternal.

Paul Ausick

“Our accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve month period following the date of these consolidated financial statements.  However, continued low power prices over the past two years have had a significant adverse impact on our business.  Further, as our credit rating has declined, counterparty requirements for posting collateral in support of our risk management positions have become more stringent. … To continue as a going concern over the next twelve months, we must either (i) meet the financial covenants so that we can access our Credit Facility, or (ii) amend or replace our Credit Facility or otherwise secure additional capital.”

The company reported $1.3 billion in outstanding debt under its credit facility, which has a limit of $1.8 billion. Any amendment or replacement will surely cost the company more, threatening its survival even further. If Dynegy can’t make the financing happen, “it may be necessary for us to seek protection from creditors under Chapter 11.”

Dynegy’s shareholders most recently rejected an offer of $5.50/share, or $665 million in cash, from investor Carl Icahn’s Icahn Enterprises, L.P. (NYSE: IEP). On top of that, the company’s CEO, CFO, and general counsel have all resigned, leaving the company with interim appointees from among its board of directors.

In it’s earnings statement Dynegy said, “In light of recent management and board changes that may affect the company’s strategic plans, Dynegy currently does not intend to provide guidance estimates for 2011.” The company also said that investors should not rely on any previous forecasts for 2011.

The company’s loss for 2010 narrowed from $1.26 billion in 2009 to $234 million. Revenues were also down year-over-year from $2.46 billion in 2009 to $2.32 billion in 2010.

Dynegy shares are down nearly -8% in pre-open trading this morning.

Paul Ausick

He  supports Clorox’s plan to buy back between 10 and 11 million shares by year-end but the filing also shows that the Icahn group may seek “to have conversations with management of the Issuer from time to time to  discuss  the  Issuer’s  business.”

Icahn’s group also may acquire additional shares and/or other equity, debt, notes, instruments, or other securities in the open market or otherwise AND also reserves the right to dispose of all or any portion of the securities.

These acquisitions began in December and some have been purchased as recently as today.  Entities in this filing include:

• High River Limited Partnership
• Hopper  Investments LLC’
• Barberry Corp.
• Icahn Partners Master Fund LP
• Icahn Partners Master Fund II LP
• Icahn  Partners Master Fund III LP
• Icahn  Offshore  LP
• Icahn Partners LP
• Icahn  Onshore  LP
• Icahn Capital LP
• IPH GP LLC
• Icahn  Enterprises Holdings L.P.
• Icahn Enterprises G.P. Inc.
• Beckton Corp.
• and Carl C. Icahn.

Clorox shares are now up 6.6% at $70.71 and shares hit a new 52-week high of $71.10 today right after the news.

JON C. OGG

Icahn’s offer of $5.50/share, for a total of $665 million, is 10% higher than the $5/share bid from The Blackstone Group L.P. (NYSE: BX) that was rejected by Icahn and Seneca Capital late last year. Icahn would also assume more than $4.5 billion in Dynegy debt. Seneca is also trying to torpedo Icahn’s bid, claiming that Dynegy is worth at least $7.50/share. Dynegy’s board does not agree, and it sure looks like they’ve got a point.

In a letter to shareholders, the board recommends that shareholders accept Icahn’s bid because “accepting known premium value today is superior to the risks of continuing as an independent company.” Dynegy shares were trading at about $2.75/share before Blackstone’s offer last fall.

Dynegy’s board also notes that it has completed two “go-shop” periods lasting more than 100 days, and even two private equity firms who performed extensive due diligence passed on making an offer.

Dynegy is apparently the first victim of the very low prices for natural gas in the the US. Higher natural gas production has driven down the cost of natural gas and a knock-on effect has been to cause power prices to fall. Dynegy expects those power prices to remain low far longer than Dynegy could remain solvent.

The board also took a few shots at Seneca Capital, saying that the firm did take advantage of the go-shop period even to investigate the Icahn offer. Seneca also sought a waiver of Dynegy’s poison pill provisions, and sent out materials that “contained factual errors, inaccuracies, and exceedingly wishful assumptions about power markets and environmental enforcement.”

Dynegy holds nearly 12,000 megawatts of generation, about 3,500 megawatts of which is coal-fired or coal/oil dual-generation. The rest is either gas-fired, gas/oil-fired, or oil-fired only.

From all appearances, Dynegy looks like it will bleed to death slowly if the Icahn deal is rejected. If another 46% of shares are tendered by Monday, though, the company is only likely to bleed to death more quickly as Icahn sells of the pieces.

Paul Ausick

On Friday afternoon came federal approval for the pending FirstEnergy Corp. (NYSE: FE) and Allegheny Energy Inc. (NYSE: AYE) merger.  The firms still have to go through state approvals to secure the merger.  FirstEnergy’s $4.7 billion deal comes to paying $27.65 per share to Allegheny holders.

Progress is valued at $13.7 billion or $46.48 per share, but this is a stock-for-stock deal.  Progress Energy holders will receive 2.6125 shares of common stock of Duke Energy per Progress share.  Duke Energy will assume over $12 billion in Progress Energy net debt.

Duke Energy holders will own about 63% and Progress about 37% of the new company.  Duke also expects to effect a reverse stock split before the merger and the exchange ratio will be adjusted.

Another pending deal in the world of utilities is Dynegy Inc. (NYSE: DYN), where Carl Icahn’s Icahn Enterprises, L.P. (NYSE: IEP) is in a deal to acquire the company if a go-shop provision does not generate a higher buyout price.  Dynegy’s buyout is a tender offer that will follow with a formal merger that pays Dynegy shareholders $5.50 per share in cash.

There is also the pending Northeast Utilities (NYSE: NU) merger with NSTAR (NYSE: NST) announced back in October.  The components inside the Utilities Select Sector SPDR (NYSE: XLU) appear to be getting fewer and fewer.

Duke shares are down 1.6% at $17.50 against a 52-week range of $15.47 to $18.60 with a 5.5% dividend yield; Progress shares are down 1.6% at $43.98 against a 52-week range of $37.04 to $45.61 with a near 5.5% dividend yield.

Duke and Progress highlighted the premiums here, but shareholders may want more leverage other than just larger scale.

American Electric Power Co., Inc. (NYSE: AEP) is so far not in the merger mania.  It was recently voted as one of our top ten stocks to hold for the next decade.

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JON C. OGG

Dynegy’s buyout is a tender offer that will follow with a formal merger that pays Dynegy shareholders $5.50 per share in cash.  IEP and its affiliates own approximately 9.9% of Dynegy’s outstanding shares and have previously acquired options to purchase approximately 5% of Dynegy’s outstanding shares.

This is a deal where the plot has thickened and thickened.  The Blackstone Group (NYSE: BX) originally tried to buy Dynegy for $4.50 per share in an August offer and then raised its offer to $5.00 per share.

There is an out here and a go-shop provision: “IEP has also agreed that, in certain circumstances, if a ‘superior’ all cash offer is made and supported by Dynegy, and IEP does not wish to top the ‘superior’ offer, it will support it.”  Dynegy will continue its ongoing open strategic alternatives process where Dynegy will solicit superior proposals until January 24, 2011.

As far as what Icahn will get, the company provides electricity to markets and customers in the United States; as of December 31, 2009, its power generation portfolio consisted of approximately 12,300 megawatts of baseload, intermediate, and peaking power plants fueled by a mix of natural gas, coal, and fuel oil.

The equity value is listed as only $665 million, but Dynegy has approximately $3.95 billion in outstanding debt.

Investors are hoping for a higher deal yet.  Shares are up 4.7% at $5.71 in pre-market trading versus a 52-week range of $2.76 to $10.15.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG