Accenture (ACN) Started as Outperform at Baird.
Anadarko Petroleum (APC) Raised to Outperform at FBR.
Apple (AAPL) Started as Outperform at William Blair.
Cubic (CUB) Raised to Overweight at JPMorgan.
International Rectifier (IRF) Started as Buy at Merriman Curhan Ford.
Nanometrics (NANO) Started as Overweight at Piper Jaffray.
Perot Systems (PER) Started as Outperform at Baird.
Rackspace (RAX) Started as Buy at ThinkEquity.
Zumiez (ZUMZ) Raised to Outperform at William Blair.

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Jon C. Ogg

Waste Management Inc. (NYSE: WMI) withdrew a $6.7 billion offer to acquireRepublic Services Inc. (NYSE: RSG).  Waste Management shares are up more than 10% and Republic Services shares are up about 6% on the news.  Thereason cited was the current turmoil in the financial markets.  WasteManagement had even raised its offer, but is now unwilling to risk itsfinancial strength to go after a hostile merger that would be for terms that are now way out of the money.  This now leaves AlliedWaste Industries Inc. (NYSE: AW) as a potential target again ofRepublic Services.  Bill Gates has been a serial acquirer of RepublicServices’ shares, and he’d be sitting on about a 50% gain from today’s pricesif that merger was accepted.  Imagine a software pioneer gone garbageman.

Vishay Intertechnology Inc. (NYSE: VSH) threw out its proposed offer toacquire International Rectifier Corp. (NYSE: IRF).  That $23.00 bid had essentially become a hostile merger, and in today’s climate payingup for a company that doesn’t really want to sell is a riskyventure when the capital markets are closed or illiquid.  InternationalRectifier shareholders rejected the nomination of three oppositioncandidates for its board of directors just last week.  That merger wasalso raised from its initial level and it would have been a $1.7billion deal.

Diebold Inc. (NYSE: DBD) has beenfending off a buyout offer from United Technologies Corp. (NYSE: UTX).This offer was a $2.63 billion buyout that would have valued Diebold at$40.00 per share.  Management of Diebold had refused requests to speakand was not allowing the internal due diligence to make any formal dealclose.  That was more than a 60% premium from the price at the time ofthe offer, but it was also more than 20% down from its trailing 52-weekhighs at the time the offer was made.

This merger has had no updates today, but there is also this pending"troubled" acqusition of SanDisk Corp. (NASDAQ: SNDK).  Samsung in Korea has sent a$5.8 billion offer to management at SanDisk which would value it at$26.00 per share.  Again management of SanDisk is fighting this andeven cited its 52-week high as part of the reason it won’t allow thedue diligence and negotiations to proceed.  Shares of SanDisk aretrading under $17.00 today, which would net more than a 50% return ifit somehow went through.  Of course that will also destroy many holdersas the 52-week high is north of $50.00. 

What is very interesting here is that companies are wanting more andmore to be acquired and they are  acting to not sell their companiesfor what a "mark to market" merger of today would be worth.  Going backin time and picking all-time highs or 52-week highs is not really howthe market values companies.  The market price is the vote of today forwhat a company is worth.  But when managers only want to sell at whatcompanies were once worth at the peak, then it can get in the way ofthe shareholder agendas of today.

It is important to remember one thing about merger investing.  You canfrequently pick that actual target of a buyout.  But he thing youcannot accurately do is predict the reaction to the offer.  Some public companies run by founders or run by strong managers do not wantto sell at all.  Some only want to sell at prices that are notreflective of the realities of today’s prices.

The buyers can only buy companies which they either deem as cheap orbolt-on companies that give a lock over an industry or give a bettercompetitive advantage.  In either case, the price often makes thatdetermination.

None of these mergers being broken todayhave anything to do with the woes in private equity.  These issues hereare essentially either management of the target company not wanting tosell or it is an issue of the cost not making sense.  In a world wherecompanies have to hoard cash and run lean to protect their debt ratingsand to protect their ability to raise cash, it might be an easy call tosay that mergers with wildly high premiums are probably not going to beseen for a while.

Jon C. Ogg
October 13, 2008

• Apollo Group (NASDAQ: APOL) Raised to Outperform at Credit Suisse.
• Beazer Homes (NYSE: BZH) Raised To Neutral at UBS.
• Chubb (NYSE: CB) Raised to Equal-Weight at Morgan Stanley.
• Cognizant Technology (NASDAQ: CTSH) Cut To Neutral at Goldman Sachs.
• Fifth Third Bancorp (NASDAQ: FITB) Raised to Outperform at KBW.
• International Rectifier (NYSE: IRF) Cut to Sell at Citigroup.
• Pepsi Bottling (NYSE: PBG) Raised to Neutral at JPMorgan.
• SanDisk (NASDAQ: SNDK) Cut to Hold from Buy at Citigroup.
• Sybase (NYSE: SY) Cut to Neutral at Banc Of America.
• Symantec (NASDAQ: SYMC) Cut to Market Perform at FBR.
• Western Gas Partners (NYSE: WES) Started as Hold at Citigroup.

Jon C. Ogg
June 20, 2008

King Pharmaceuticals (KG) Still taking hammer because patent on top drug was found to be invalid. Down to $12.26 from 52-week high of $22.25.

International Rectifier (IRF) CEO on leave due to audit. Shares just keep falling. Drops to $31.37 from 52-week high of $44.36.

Expressjet Holdings (XJT) Oil up. Bad time to be in airline business. Falls to $3.68 from 52-week high of $9.61.

Steven Madden (SHOO) Director steps down. Shares now off to $20.02 from 52-week high of $44.70.

Home Solutions (HSOA) Provider of construction business during real estate recession. Shares off to $2.45 from 52-week high of $8.24.

Caribou Coffee  (CBOU) Like Starbucks (SBUX), only smaller. But, similar drop in stock price. Down to $5.74 from 52-week high of $9.27.

Douglas A. McIntyre