Icahn may threaten Yang with proxy; Clear Channel reportedly close to deal; critics size up HP, EDS deal

By Aaron Hochman-Zimmerman

New York, May 13 - The session closed with more questions than answers on Tuesday as a new player in the Yahoo! Inc.-Microsoft Corp. drama took the stage.

Carl Icahn, who is known as a bold actor, may take up the cause of the proxy war against Yahoo! chief executive officer Jerry Yang and deliver Microsoft its prize, reports said.

Meanwhile, shortly after the guns fell silent for the one-day truce between Clear Channel Communications Corp., its private equity buyers and the financing banks, rumors of a deal at the price of $36 per share crept across the market pushing share prices higher.

Elsewhere, investors took their differing opinions about Hewlett-Packard Co.'s acquisition of Electronic Data Systems Inc., but despite some praise and criticism, the deal was signed at $13.2 billion or $25 per share.

19X's Rober Sillerman put a $12 per share offer in front of CKX Corp., $1.50 per share less than before, but sources felt CKX would have to swallow hard and take what it could get.

In pharmaceuticals, shares of Usana Health Sciences Inc. were flying as Gull Holdings Inc. announced it would eat the shares of Usana it does not already own.

In defense, DRS Technologies Inc. traded well as Italy's Finmeccanica SpA pulled the trigger on an $81 per share or $5.2 billion deal to buy the Parsippany, N.J.-based contractor.

Staples Inc. fastened the Netherlands' Corporate Express NV to the negotiating table with an €8 euro per share offer as its own shares improved.

BCE Inc. shares rose after it submitted the necessary forms to the Canadian Radio-television and Telecommunications Commission ahead of the planned acquisition by Teachers' Private Capital.

The hectic deal day was complimented by mixed trading as the Dow Jones Industrial Average ended off by 44.13, or 0.34%, at 12,832.18, while the Nasdaq Composite Index added 6.63, or 0.27%, to finish at 2,495.12.

The S&P 500 slid by just 0.54, or 0.04%, to close at 1,403.04.

Icahn steps in Yahoo!

Sources had mixed opinions of what Carl Icahn is up to with his foot in the door at Yahoo!, but the billionaire has a history of doing the unexpected.

"Icahn is an independent thinker," an analyst said.

The market would probably do itself a favor not to get ahead of itself in speculation, the analyst said.

"[Icahn] hasn't said anything yet" about his plans for Yahoo!, the analyst said.

Icahn's least likely strategy is to sit in the back and do nothing with his reportedly 50 million share stake.

"[Icahn] is considering a proxy fight," the source said, to "make them sell to Microsoft."

Shares of Yahoo! (Nasdaq: YHOO) were better by $1.30, or 5.15%, to $26.56.

Shares of Microsoft (Nasdaq: MSFT) slipped $0.10, or 0.33%, to $29.78.

EDS compatible with HP?

Shares of Electronic Data Systems (NYSE: EDS) added $0.26, or 1.08%, to $24.34 after a $13.2 billion, $25 per share deal was signed with Hewlett-Packard.

If the deal closes as expected in the second half of 2008, the new entity will be second only to IBM Corp. in the technology services sphere.

Still, the many in the market balked at the price HP had to pay.

"They say they paid a pretty high price for it," a market source said.

"It looked like it was received unfavorably," he added, but commented that maybe too many people were drawing unfair comparisons to Hewlett-Packard's deal-making past.

"HP, Compaq was a huge debacle," he said.

Meanwhile, a cheerleader for HP said that the deal may prove to add to its revenue and close a distribution path which would help it stand up to IBM, a source said.

Shares of HP (NYSE: HPQ) slid by $2.56, or 5.47%, to close the day at $44.27.

Clear Channel hooks market on deal rumors

The truce between Clear Channel, its prospective buyers and the financing banks may have served to forge the foundation of a deal for the largest radio station operator in the country.

Unnamed sources lit up the wires with reports of a deal which would lower the purchase price to $36 per share from $39.20 per share.

Investors waited to hear confirmation or anything about Clear Channel, but all parties involved preferred to save the news for another day.

Still, "it's not like this will happen quickly," a market source said.

"If they negotiate this from $39.20 [per share] to $36 [per share], the shareholders are going to have to vote again ... it'll take several weeks to schedule a shareholder meeting," a source said grounding the news back to reality.

Shares of Clear Channel (NYSE: CCU) improved by $1.43, to 4.35%, to finish at $34.30.

Sillerman slices CKX offer price

Citing a "seismic shift in the buyout world," 19X owner Robert Sillerman asked CKX Corp. to accept a refigured price of $12 per share, down from $13.50 per share.

Sillerman also asked for the deadline to be extended until Sept. 30 and for a decision regarding the new terms by May 22.

"We remain committed to completing the acquisition of CKX at a price that we believe reflects the continued outstanding performance of the company and which provides a substantial premium above the current price to the company's stockholders," Sillerman said in a statement.

Shares of CKX (Nasdaq: CKXE) took on $0.36, or 3.71%, to end at $10.06.

When asked if a CKX is likely to accept the lower offer an analyst told Prospect News: "It's Robert Sillerman, and he does seem to have his way with that company," he said about CKX.

Gull circles Usana

In pharmaceuticals, shares of Usana (Nasdaq: USNA) soared by $4.82, or 23.14%, to end at $25.65 as Gull Holdings announced a $26 per share offer for the 32% of Usana it does not already own.

The price represents a 24.8% premium to Usana's Monday closing price.

"Going private will provide significant cost savings and will allow Usana's talented management team, employees, and associates to focus solely on providing industry-leading products and building Usana's strong associate network without the pressures and distractions brought on by the public market. Usana has not relied upon its public company status to raise capital and I do not expect that to change," said Usana chairman and chief executive officer Myron Wentz.

Finmeccanica locks on to DRS

Shares of DRS Technologies (NYSE: DRS) were up by just $0.48, or 0.62%, to $77.67 as Finmeccanica announced its $81 per share or $5.2 billion acquisition of the Parsippany, N.J.-based defense contractor.

The price represents a 32% premium to DRS' average stock price over the past 30 days.

The deal, which is scheduled to close in the fourth quarter, is expected to open up international markets to DRS and U.S. markets to Rome-based Finmeccanica.

"Today's transaction is a perfect fit; the complementary technologies and platforms will establish a new competitive player in defense and security markets in the U.S. and around the world," said Pier Francesco Guarguaglini, chairman and chief executive officer of Finmeccanica.

"DRS' dramatic growth over the past five years and the premium provided through this acquisition will provide attractive returns for our stockholders," Mark Newman, chairman, president and chief executive officer of DRS, added.

A termination fee of $90 million was attached to the deal.

Staples guns for Corporate Express

The Netherlands' Corporate Express NV agreed to discuss Staples' offer of €8 per share.

The unsolicited offer is nearly a 90% premium over Corporate Express' current value and 51% premium to Corporate Express share value when the original €7.25 offer was made on Feb. 19.

"We are willing to have discussions with Staples and clearly this still applies also on the basis of today's announcement," said Peter Ventress, chief executive officer of Corporate Express about the €8 per share offer.

Shares of Staples (Nasdaq: SPLS) tacked on $0.48, or 2.19%, to $22.44.

BCE files with regulators

BCE's shares improved by $1.15, or 3.04%, to end at $39.01 as the company (NYSE: BCE) announced it has filed all the appropriate paperwork with the CRTC to be bought by Teachers' Private Capital.

The deal is still expected to close in the second quarter, a market source said.

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