InBev floats Anheuser offer; politicians transmit on satellite radio deal; Icahn trapped by severance plan?

By Aaron Hochman-Zimmerman

New York, June 11 - Stocks were pounded again on Wednesday as the market became largely distracted by Lehman Brothers and surging oil prices.

"I'm just wondering where the top is for oil and where the bottom is for Lehman Brothers," said Paul Martin of Martin Capital Management.

Many investors were in dire need of a beer by the bell, but it was InBev NV which seemed the thirstiest with the revival of its $65.00 per share offer for Anheuser-Busch Cos. Inc.

Superior Essex Inc. and LS Cable Ltd. announced that they were finally able to brew up a deal of their own at $45 per share.

Elsewhere, the satellite radio deal was the talk of Washington D.C. as the chiefs of XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. pled their case with the Federal Communications Commission and senators questioned the very premise of interoperability between the two systems.

Questions also arose over the Yahoo! Inc.'s severance plan which is so reviled by Carl Icahn as the poison pill which spooked Microsoft Corp. If he succeeds with his own proxy fight, Icahn may create the change of control necessary for severance eligibility.

In the larger market picture, "it's been a pretty remarkable sell-off over the last few days," Martin said.

"Now we're back to where we were in mid April," he said, and "the Fed governors are making comments about inflation and raising rates sooner rather than later."

Although "I don't think they will," he said.

The Dow Jones Industrial Average sank by 205.99, or 1.68%, to end at 12,083.77, while the Nasdaq Composite Index gave up 54.93, or 2.24%, to finish at 2,394.01.

The S&P 500 dropped 22.95, or 1.69%, to close at 1,335.49.

This Bud's for Inbev?

Anheuser-Busch acknowledged that its Belgian competitor InBev offered to buy more than a round late Wednesday.

InBev revived its offer of $65.00 per share which would put the deal near $45 billion.

"The board will review the merits of the proposal consistent with its fiduciary duties and in consultation with its financial and legal advisers," Anheuser-Busch said in a statement.

"I think that it's unclear from the Anheuser-Busch standpoint whether or not the board will accept it," said Morningstar analyst Ann Gilpin.

There will be a lot of pressure on the board from the shareholders who are largely in favor of the deal, she said.

Still, the Busch family has representatives on the board who may act sentimentally and would like the company to stay American and stay in St. Louis, she said.

There is also the chance that the board will "do something really stupid like run up the balance sheet or buy the rest of Grupo Modelo to fend off ImBev," she said.

The timing "depends on how dramatic the board wants to get," she said, "we could wake up tomorrow and the board could say yes."

However, if the board is in the mood for hardball, InBev "may take it directly to the shareholders," she said.

JP Morgan and Banco Santander had been mentioned as possible advisors when the deal was discussed in May.

Shares of Anheuser-Busch (NYSE: BUD) tied on $1.20, 2.10%, to end at $58.35, with most of the gain recorded in the final hour.

The InBev offer was disclosed after the close and Anheuser-Busch gained a further $4.38, or 7.51%, to $62.73 in after-hours trading.

Satellite radio deal tunes to politics

After chief executive officers Mel Karmazin and Nate Davis of Sirius and XM met with the FCC chairman Deborah Tate in order to rush the deal through, the New York Post reported that Sen. Sam Brownback, R-Kan., wrote to Judiciary Committee chairman, Sen. Pat Leahy, D-Vt., asking for the unredacted version of the letter sent to the FCC by the Consumer Coalition for Competition in Satellite Radio.

Brownback, who has often criticized the radio deal, believes Karmazin may have lied to Congress about the possibility of interoperable satellite radio receivers.

Paul Martin of Martin Capital suggested that "they can either merge or one of them is going to go out of business."

In either scenario the government loses one of the competitors, he said.

"They can do this the easy way or they can do it the hard way," he said, adding that his firm formerly had positions in both companies, but "I couldn't figure out how these guys were going to get this thing resolved."

Shares of XM Satellite Radio (Nasdaq: XMSR) lost $0.38, or 3.46%, to close at $10.59.

Shares of Sirius Satellite Radio (Nasdaq: SIRI) also fell $0.10, or 3.92%, to finish the day at $2.45.

Icahn's severed plans?

Intriguer and investor Carl Icahn may actually trip the severance plan he has been railing against with his proxy fight, the Sacramento Business Journal reported.

A change of control in the company would activate the plan for those who left Yahoo! under certain circumstances and may cost between $514 million or $845 million according to Yahoo! and $2.4 billion according to Icahn's own estimation of the severance package.

Shares of Yahoo! (Nasdaq: YHOO) gave up $0.25, or 0.95%, to $26.15.

Superior Essex, LS Cable tie up

Superior Essex announced it has signed an agreement with South Korea's LS Cable for a $45 per share cash tender offer, according to a press release.

The price represents a 50% premium to the stock's year-to-date trading price.

The offer period for the tender will last from July 1 to July 31.

"This combination is a perfect operational and geographic fit," said Christopher Koo, vice chairman and chief executive officer of LS Cable, in a statement.

"Both of our companies are highly respected by customers and suppliers in the wire and cable industry. Together, we will significantly enhance the value we offer to all of our customers, as well as to our employees. I have every confidence that this transaction is the right one," he said.

Shares of Superior Essex (Nasdaq: SPSX) added $0.67, or 1.52%, to end the day at $44.77.

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