Bristol-Myers had originally offered $60.00.  Carl Icahn wanted moreand he looked for an alternative suitor.  When he made hisannouncement that a mystery bidder had surfaced with a tentative $70.00buyout offer pending due diligence, many were questioning if it was real or aploy.  It’s real, and the credit goes to Carl Icahn for securing that.  Many speculated that that Merck & Co. (NYSE: MRK) was going to emerge as the mystery bidder before the Wall Street Journal broke the Lilly link last week.

Shares of ImClone were trading around $69.00 early thismorning before the open, but right after the open rose4.25% to $67.73.  It will be interesting to see if Bristol-Myers sitson its hands or not.  Will a bidding war come into play?

Lilly shares are down 3.75% at $39.77 right after the open.Unfortunately, that is a new 52-week low versus its prior low of $41.24.

Shares of Bristol-Myers are down almost 1% at $20.25, still above its 52-week low of $19.43.

Jon C. Ogg
October 6, 2008

Reuters reports that GE (GE) raised $15 billion with some of the capital coming from Warren Buffett.

Reuters writes the the SEC extended its short sales ban.

Reuters reports that auto sales fell sharply as the credit crisis hurt buyers.

Reuters reports that factory activity is weak as is the job market according to figures from the US government.

Reuters reports that Nokia’s (NOK) gave credit to Apple (AAPL) and RIM (RIMM) for opening the smartphone market to more people and said his goal was to pass RIMM in users for similar devices.

Reuters reports that Eli Lilly (LLY) plans to buy ImClone (IMCL).

Reuters writes that the lending market is tight despite government action to free up credit.

The Wall Street Journal reports that the Fed is considering further rate cuts.

The Wall Street Journal reports that the Justice Department is looking into sales of auction-rate securities by Lehman.

The Wall Street Journal reports that the debt crisis is further weakening newspaper companies.

The Wall Street Journal reports that HP (HPQ) bought a major electronic storage firm.

The Wall Street Journal reports that Wal-Mart (WMT) has cut prices on toys for the holidays.

The Wall Street Journal reports that China’s big oil companies are looked for purchases and joint ventures all around the world.

The New York Times reports that many small businesses have found their access to capital because of the credit crisis.

The FT reports that AIG (AIG) is preparing for a huge asset sale.

Bloomberg reports that UBS (UBS) posted a small profit and reduced it exposure to mortgage securities.

Douglas A. McIntyre

Reuters reports that Belgian-Dutch group Fortis was nationalized

Reuters reports that British mortgage lender Bradford & Bingley will have it branches sold and the rest will be nationalized.

Reuters reports that weak US bank Wachovia (WB) is likely to be taken over by Citigroup (C) or Wells Fargo (WFC)

Reuters reports that ImClone is expected to announce that it is continuing talks to sell itself to a major pharmaceutical concern.

Reuters writes that private equity firms Bain Capital and Hellman & Friedman are closer to a deal to buy Lehman’s Neuberger Berman unit

The Wall Street Journal writes that the failure of Lehman caused the current credit crunch and that a government takeover would have prevented it.

The Wall Street Journal reports that many small banks are in trouble because of their investment in Fannie Mae (FNM) and Freddie Mac (FRE).

The Wall Street Journal reports that vulture funds may buy up financial assets before the bailout is approved by Congress.

The Wall Street Journal reports that AIG’s (AIG) board met to decide which assets to sell.

The Wall Street Journal reports that a new Tivo (TIVO) package will let PCs record TV.

The Wall Street Journal reports that the new jobless reports is likely to show a spread of the financial crisis.

The Wall Street Journal reports that the bailout has some provisions to let homeowners to keep their houses.

The Wall Street Journal writes that steel companies are seeing a sharp drop in demand.

The New York Times reports that the bailout bill would give Treasury tremendous new power.

The New York Times reports that the bailout bill faces a tough vote in the House.

The New York Times reports that hedge funds are facing huge redemptions.

The FT reports that Goldman Sachs (GS) may buy $50 billion in distressed assets from banks as it transforms itself into a bank holding company.

Douglas A. McIntyre

ImClone shares are up $3.10 at $62.50 in late morningtrading.  This still might not be enough to secure a deal, at least if Carl Icahn gets his way.  Using a tender directly toshareholders allows them to begin the immediate sale and realizationof profits.  But it also is below the current share price after the pop from last night’s news.  Thatputs the stock market odds at about 90% that an even higher deal will come or thatCarl Icahn will win his defense of the company for an even higher value.

Icahn has already signaled that he has a higher tentative bid in thewings, but this will also run the risk of keeping the deal lingering through next year.Depending upon what price shareholders are in ImClone, they mightactually do better by taking the money now rather thanwaiting for a $70.00 bid.  The reason is simple: 15% capitalgains tax rates in 2008 may be much higher in 2009.  That is mostlydependent upon the outcome of the Presidential election, but the 1993 precedent wasset showing that taxes can be retroactive during the same year.

Sometimes a bird in the hand is worth more than two in the bush.  CarlIcahn is no newbie to proxy fights.  But it is very possible that he istaking too aggressive of a stance here.  If that higher bid doesn’t materialize, then he’s taking on added risks for holders.  It seems hislatest efforts have yielded more losses than before after the stumblesat Yahoo! and Motorola.  Sometimes the desire to win and the cost ofthe battle exceed the war chest winnings.  Whether or not that is thecase will be known soon enough.

ImClone did get as high as $68.89 after Icahn revealed a higher possible bid was waiting in the wings.  Some third market trades in the after-hours and pre-market hours were right around $70.00.  But shares quickly sold off because of the tentative nature of things involving tentative higher bids and the risks that can prevail in fluid situations.  Shares have also closed under $60.00 in each of the last four days.  While a higher bid is being bet on, it would seem as of today that Carl Icahn may have a real fight on his hands.

Jon C. Ogg
September 23, 2008

As the letter states….."Notwithstanding ImClone’s receipt of ahighly conditional preliminary proposal from another party, we continueto look forward to engaging directly with ImClone and its financial andlegal advisors to discuss the merits of our all-cash offer, which isnot subject to due diligence or financing, to acquire the approximately83% of ImClone that we do not already own."

In short, Bristol-Myers is trying to start flexing its muscles now thatImClone and Carl Icahn have started showing face cards.  ImClone is down1.4% at $66.95 today.  Technically, this is no more than step-3 of along series of steps in an Icahn merger game.

Jon C. Ogg
September 11, 2008

Reuters reports that billionaire Carlos Slim has bought 6% of The New York Times (NYT).

Reuters writes that Northrop Grumman (NOC) may get a $5 billion deal to build an aircraft carrier for the US Navy.

Chrysler will introduce seven new models by 2010, according to Reuters.

Reuters reports that Apple (AAPL) settled a shareholder suit for options backdating for $14 million.

The Wall Street Journal reports the exports have supported a number of US regions due mostly to the fall of the dollar.

The Pension Benefit Guaranty Corporation is pressuring Delphi and GM (GM) to fund the troubled auto parts company’s pension, the Journal says.

The Wall Street Journal reports that Fannie Mae (FNM) sold a record $7 billion of two-year notes as investor demand for the offering exceeded expectations.

The Wall Street Journal says that Bank of America (BAC) will buy back $4.5 billion in auction-rate securities.

The Wall Street Journal reports that India’s Infosys expects weak growth in its current fiscal year.

The Wall Street Journal reports that Imclone (IMCL) rejected a bid from Bristol-Myers (BBY).

The Wall Street Journal writes that advertising has slowed at Time Warner’s (TWX) AOL.

The Wall Street Journal reports that the Russian stock market has been plunging.

The Wall Street Journal reports that the Pentagon canceled a $40 billion tanker competition, a victory for Boeing (BA).

The New York Times says that problems with falling real estate have spread to China.

The New York Times reports that Saudi Arabia will ignore an OPEC production cut.

The New York Times says that banks are increasingly offering small businesses credit cards rather than lines of credit .

The FT writes that money is flowing out of equities and bonds in emerging markets.

The FT reports that banks could face billion of dollars in credit derivatives contracts losses from Fannie Mae (FNM) and Freddie Mac (FRE).

Bloomberg reports that the Fed may increase loans to bankers and brokerage firms.

Bloomberg writes that the administration is trying to figure out how to put Fannie and Freddie’s $5.2 trillion in debt into the federal budget.

Douglas A. McIntyre

The press release also noted that there was no determination ifthe $70.00 bid would be adequate to acquire the company.  Wall Street was anticipating a higher offer.  Shares closed at $63.65yesterday and are now trading around $70.00 in thepre-market.  Back at the height of the Erbitux news in 2004, this stockbriefly traded north of $80.00 before going down to under $40.00 formost of the 2005 to 2007 period.

Getting a higher bid like this may not result in a deal and theforward valuations will become an issue of concern based upon forwardestimates.  Icahn has said that announcements regarding the pipelineand current developments make the company more valuable.  How much morevaluable is up for debate.

We have seen roughly600,000 shares trade hands.  Day traders are going to be active in thisstock with shares at multi-year highs.

Jon C. Ogg
September 10, 2008

Reuters writes that the Fed is seen as holding rates steady.

Reuters writes that after damaging their reputations, credit ratings agencies are seeking redemption.

Reuters reports that Alan Greenspan says there will be more bank failures.

Reuters writes that the CEO of Merrill Lynch (MER) told CNBC that the broker may have to raise more money.

The Wall Street Journal writes that Alcatel-Lucent (ALU) is looking for a new top management team.

The Wall Street Journal reports that defaults are hitting credit card bonds.

The Wall Street Journal writes that a battle has begun over Bristol-Myers (BMY) bid for Imclone (IMCL).

The Wall Street Journal reports that AT&T (T) will start a cloud computing business for its enterprise customers.

The Wall Street Journal writes that Dish Network (DISH) may be looking for a deal to get DirecTV (DTV)

The Wall Street Journal writes that Google’s (GOOG) YouTube will provide coverage of the Olympics.

The New York Times writes that the CEO of Freddie Mac (FRE) disregarded warnings about its practices as early as 2004.

The New York Times reports that China has begun to worry about a slowdown in its economy.

The New York Times reports that an Eli Lilly (LLY) drug Byetta, an injectable, that lowers blood sugar, may help people with diabetes to live longer.

The FT writes that oil prices are dropping on concerns about global economic growth.

Bloomberg writes that Societe Generale profits fell 63% on losses in its investment bank.

Bloomberg reports that Fannie Mae (FNM) and Freddie Mac losses may extend into 2009 as delinquencies rise.

Douglas A. McIntyre

If you find this surprising, then you didn’t look over trading whereImClone was trading above the $60.00 offer price and haven’t reviewed how onmany occasions where Carl Icahn rejected a first offer to hold out formore cash.

The board of directors has also been discussing the possibility ofseparating the company into its ERBITUX franchise and its pipelinebusinesses into two companies in order to maximize value.  The stillbelieve that ImClone’s pipeline business may be extremely valuable andsignificantly increase stockholder value as a separate business.

There is an interesting note here regarding conflicts.  Mr. Icahnstated that he was disturbed that one of the directors on the ImCloneboard (who is the Bristol-Myers designee) was privy to the informationdiscussed at previous meetings concerning the potential separation ofImClone into two separate components and how this restructuring mightenhance stockholder value.  The board is now reviewing whetherBristol-Myers had access to confidential information concerning ImCloneand its pipeline.

Icahn has also pointed out that ImClone has a pipeline antibody calledIMC-11F8 under development which might have a significant competitiveeffect on ERBITUX if given marketing approval and that Bristol-Myersmay have no rights to market that product under its existing agreementswith the company.

Icahn is again opposed to the Bristol-Myers offer because he believesthat "it greatly undervalues the company" and the company indicatedthat other large stockholders have given statements indicating theiropposition to the Bristol-Myers offer.

The saga continues.  Shares are trading down by 0.5% in pre-markettrading at $65.00 on somewhat thin volume considering the scope of thisdeal. 

Jon C. Ogg
August 4, 2008

• First Mercury (FMR) Cut to Neutral at JPMorgan.
• GOL Linhas Areas Inteligentes S.A. (GOL) Cut to Underweight at JPMorgan.
• Hansen Medical (HNSN) Cut to Neutral at Merriman Curhan Ford.
• ImClone (IMCL) Cut to Hold at Citigroup.
• Monster Worldwide (MNST) Cut to Neutral at JPMorgan.
• Osiris Therapeutics (OSIR) Cut to Underperform at Jefferies.
• Wyeth (WYE) Cut to Neutral at HSBC.

Jon C. Ogg
August 1, 2008