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$ Greenfield Online, Inc (SRVY) - Microsoft Corp (MSFT)
September 12, 2008 (10:40a) - Tender Offer Statement Filed

MSFT filed the initial tender offer statement and offer to purchase for this transaction with the SEC on September 11, 2008.
The current tender offer expiration date is Wednesday, October 8, 2008.

The regulatory matters section of the statement notes the following regarding the HSR condition:
“Microsoft and Greenfield are required to file a Notification and Report Form under the HSR Act, which filing is required to be made as soon as practicable (and in any event by September 15, 2008) pursuant to the Merger Agreement. Currently, Microsoft expects to file the Notification and Report Forms as promptly as practicable after the date hereof.”

As this proposed acquisition does not involve any competition/antitrust issues, HSR clearance is anticipated before the current October 8 tender offer expiration date.

The document also identifies regulatory approvals in Germany and Italy. As with every tender offer transaction, the presence of non-U.S. regulatory reviews greatly increases the chances of some brief extensions to the offer period, depending on efficiency in notification filing. As of this entry, there is no record of this transaction on the GFCO’s pending review list. Thus, there is some possibility that the GFCO or Italian review could force a tender offer extension into mid-October.

Nevertheless, MSFT should have absolutely no difficulty completing this transaction in less than 45 days.

Huntsman Corporation (HUN) - Hexion Specialty Chemicals
September 12, 2008 (10:00a) - Status Report

Today’s early developments in this saga include this SEC filing by HUN, which essentially chides Hexion for its conditional consent to the “backstop payment” offer disclosed previously:

“We also reiterate that the Backstop Proposals by their terms are just that: backstops. If you honestly believe that the combined entity would not be solvent on your chosen capital structure without the backstop payments, you are in breach of your obligations under the merger agreement as a result of your failure to pursue the CVRs, raise equity or take all the other actions that are available to you to shore up your own balance sheet. You have been offered more funds at closing than that provided by the Backstop Proposals, and you have to date knowingly and intentionally refused to pursue any other available financing, even on terms as favorable as those reflected in the CVRs. We reserve all rights under the merger agreement or otherwise.

“We must take issue with your ‘concern’ about the accuracy and completeness of our public statements. Our public statements have not been inaccurate or incomplete and we do not appreciate the suggestion otherwise. We fully recognize that we are engaged in litigation that you initiated and that the parties are this week setting forth the respective cases before the Delaware Chancery Court. We are confident that the evidence in the litigation will prove out our views.”

Hexion has just responded with the following:

From the public filing made by Huntsman this morning, it is clear Huntsman does not have a solvency certificate. We note the peculiar timing of the announcement in view of Huntsman’s request for an expedited trial and the fact that the firm they reference was retained two months ago.”

It now appears that in one step HUN has reversed whatever chances existed to avoid litigation via the backstop payment negotiations. This situation is now again devolving into a situation where a positive outcome for HUN, under any scenario, is becoming more unlikely due to its own posturing.

$Longs Drug Stores (LDG) - CVS Caremark (CVS)
September 12, 2008 (9:25a) - Pershing Square Letter

Pershing Square Capital Management sent a letter to LDG yesterday (9/11) expressing its continued opposition to this transaction. Key passages for the letter are as follows:

“For the reasons outlined in this letter, we do not currently support the Transaction and consequently do not intend to tender our 3.1 million shares into the CVS offer. Based on public disclosures to date, we believe that the process that led to the Transaction’s announcement was seriously flawed. On the other hand, with our efforts and the assistance of our financial advisor, The Blackstone Group, we remain hopeful that any past defects in the process can be remedied even at this late date (and despite what we view to be overly restrictive deal lock-up clauses).

“While we are critical of the process, we take comfort from the fact that the Company and its advisors negotiated a contractual provision requiring CVS to hold the offer open for one full year — until August 12, 2009. Furthermore, the Transaction permits the Company to pay its normal $0.14 dividend, so as shareholders we get paid dividends while we wait. As a result, we view ourselves and other shareholders as having a one-year “put” to CVS at the transaction price of $71.50. We believe that the value of Longs to CVS and other interested parties substantially exceeds the announced deal price. Given that approximately 18.6 million shares, or 52% of the basic outstanding shares of common stock, have traded at or above the $71.50 offer price since the Transaction’s announcement, the market appears to agree that a higher deal value should be achieved.

“Consequently, we do not believe that the tender offer’s minimum tender condition of 66 2/3% of the outstanding shares will be satisfied by September 15, 2009, the earliest date that CVS would otherwise be entitled to take up and pay for tendered shares.”
As of this update, the other two major LDG shareholders — CTW and Advisory Research — have not publicly disclosed their latest positions. However, it is fully anticipated that these two, along with other shareholders, possess nearly identical opinions as Pershing at this time.

In other words, this publication agrees with Pershing’s assessment that the minimum tender conditions will not be met by the current September 15, 2008 expiration date.

Anheuser-Busch Cos. (BUD) - InBev
September 12, 2008 (8:45a) - Status Report

This entry will acknowledge the highly publicized antitrust lawsuits filed by public entities with respect to this transaction.

These types of actionscome as absolutely no surprise, but at the same time should not be considered a serious issue for the transaction in general. As discussed in several previous reports, there are literally no real antitrust issues associated with this proposed combination. The “angry beer drinkers” lawsuits are simply emotional reactions to the prospect of the “Budweiser” icon passing into non-U.S. ownership. While understandable, these lawsuits are absolutely without merit on antitrust grounds and will be disposed of rather promptly.

The HSR second request continues to be perceived as essentially a courtesy to allow for venting from consumer and/or political entities. As the anger and concern over this combination dissipates over the coming months — and the “antitrust” lawsuits are dismissed — the FTC will approve this transaction without much, if any resistance. The bottom line here is that the combination of BUD and InBev can not possibly create a monopoly in the beer market, or anything resembling a monopoly. The concept of a dominant beer entity is simply ludicrous.

*ImClone Systems (IMCL) - Bristol-Myers Squibb (BMY)
September 12, 2008 (8:20a) - BMY Response

BMY yesterday (9/11) issued this letter to IMCL in response to IMCL’s offer rejection. Excerpts include the following:

“As you know, Bristol-Myers holds the exclusive, long-term marketing rights in the United States to ERBITUX® and related compounds, including IMC-11F8. Bristol-Myers has no intention of agreeing to any modifications to these rights. ImClone also should understand that our offer is for the entire Company, and any potential restructuring of the Company could severely jeopardize ImClone’s value and deprive ImClone’s stockholders of the benefits of our offer.

“Notwithstanding ImClone’s receipt of a highly conditional preliminary proposal from another party, we continue to look forward to engaging directly with ImClone and its financial and legal advisors to discuss the merits of our all-cash offer, which is not subject to due diligence or financing, to acquire the approximately 83% of ImClone that we do not already own.”

This reaction is viewed as relatively weak under the circumstances. BMY’s attempt to leverage Erbitux and IMC-11F8 will likely have no impact whatsoever on IMCL/Icahn’s pursuit of a superior offer from the still unknown third party.
In short, the response to IMCL’s revelations will serve only to delay the inevitable, which is an increased offered by BMY at or above the $70 level.

Apria Healthcare (AHG) - The Blackstone Group (BX)
September 11, 2008 (10:45a) - SEC Filings Submitted (AHG)

AHG has filed an amended 10-K (2007), amended 10-Q (Q1 2008) and 10-Q for the second quarter of this year with the SEC.

With respect to the merger transaction and accounting restatement, the current 10-Q states the following:

“On August 26, 2008, Apria received a notice of default from the trustee under the indenture governing the senior notes regarding Apria’s failure to deliver its Quarterly Report on Form 10-Q for the period ended June 30, 2008 within the specified time period. Pursuant to the indenture, failure by Apria to comply with such reporting requirements will become an event of default if not remedied within 60 days after the date on which written notice of such failure, requiring Apria to remedy the same, is given to Apria by the trustee, and the senior notes, together with accrued and unpaid interest thereon, shall become due and payable immediately upon notice to the Company from the Trustee or the holders of not less than 25% in aggregate principal amount of the senior notes then outstanding. Upon the filing of this quarterly report on Form 10-Q for the period ended June 30, 2008, the Company will have remedied the default under its senior notes.”

As of this entry, Blackstone has not issued a statement regarding these filings or the transaction in general.

The current, tentative perception is that AHG’s restatement is relatively positive or, at least, not catastrophic to the point where Blackstone would be forced to reconsider this transaction. In other words, the rationale for the transaction appears to remain intact, based on the updated accounting. Again, this is a very tentative assessment and until Blackstone responds (or does not respond at all), the outcome of this transaction under the current terms remains tenuous.

*Alpharma Inc. (ALO) - King Pharmaceuticals, Inc. (KG)
September 11, 2008 (10:25a) - Tender Offer Commenced / Offer Increased

KG has announced the commencement of a hostile tender offer for $37 per ALO share.
This is precisely the offer range anticipated several weeks ago and should be adequate to at least obtain ALO’s serious consideration. Again, KG is fully capable of offering above $40, so there is certainly some chance that ALO will again reject this offer as inadequate.
However, the $37 per share offer is perceived by this publication as more than generous and will very likely be considered by ALO shareholders similarly.

Rohm Haas Co. (ROH) - Dow Chemical Co. (DOW)
September 10, 2008 (11:30a) - Status Report

As widely reported throughout this morning, DOW has disclosed that it is considering certain divestitures related to the HSR review of this proposed transaction.

The revelation here is not the specific operations being considered, but rather that DOW is clearly attempting to expedite the HSR process by identifying potential divestiture so quickly. Although it is to be expected that the companies began working on this aspect of the deal well before the second request was issued on August 29, it is somewhat remarkable that DOW has publicly stated its progress this early. This must be perceived as a motivated effort, by a highly experienced company in these situations, to be as direct and efficient with the FTC as possible. In turn, this must also be perceived as extremely positive from a timing perspective for this transaction in general.

Although there is essentially no chance the companies will obtain HSR clearance (or European Commission consent) before the end of this year, DOW’s efforts at this early stage are very likely to facilitate a close during Q1 2009, whereas it has been suggested by this publication that the regulatory delays in this situation could easily push the close into the the second quarter of next year.

$Sciele Pharma, Inc. (SCRX) - Shionogi Co.
September 10, 2008 (10:55a) - Tender Offer Statement Filed

Shionogi filed the initial tender offer statement and offer to purchase for this transaction with the SEC on September 8, 2008.

The current tender offer expiration date is Friday, October 3, 2008.

The statement discloses that the HSR notification was submitted with the FTC on September 3, 2008, creating a waiting period expiration date of September 18, 2008.
Regarding non-U.S. jurisdictions, the document states the following:

“Based on our review of the information currently available about the businesses in which Sciele and its subsidiaries are engaged, we are not aware of any notification filings that are required to be made or pre-merger approvals that are required to be obtained under the antitrust and competition laws of other foreign countries.”
There remains no expectation of any regulatory delay for this acquisition and a high expectation that the tender offer will be successfully complete within the current tender offer period.

$Longs Drug Stores (LDG) - CVS Caremark (CVS)
September 10, 2008 (10:35a) - LDG Shareholder Lawsuit Settlement Announced

LDG has announced a settlement agreement related to the equity lawsuit brought forth by two California Pension funds. The complaints and settlement press release are available in this SEC filing.

This settlement does not involve the critical investor triad of Pershing Square, Advisory Research, and CTW Investment Group, all of which have expressed concerns and/or opposition to the transaction to this point.

*ImClone Systems (IMCL) - Bristol-Myers Squibb (BMY)
September 10, 2008 (9:40a) - BMY Offer Rejected / Third-Party Offer Announced

IMCL has rejected BMY’s $60 per share offer as inadequate, as expected.
In a press release, IMCL has disclosed the following regarding a competing offer:
“Mr. Icahn also announced he has had several conversations with the Chief Executive Officer of a large pharmaceutical company. As a result of such conversations, the pharmaceutical company has submitted a proposal, subject to due diligence, but not subject to financing, to acquire ImClone for $70 per share in cash. The Special Committee has determined, subject to the execution of a confidentiality agreement, to allow this company to conduct due diligence for a two week period, subject to extension by mutual consent. No determination has been made as to whether $70 per share would be adequate.”

This development is not terribly surprising under the circumstances, as an offer of $70 has been the obvious minimum for some time. Although BMY has shown no indication of submitting a reasonable offer for IMCL, this third-party offer should serve as the catalyst for BMY to act quickly and decisively. As it is very difficult to believe that BMY will simply decline to match or exceed a competing offer at this level, it is extremely likely that the company will continue to pursue IMCL via an offer exceeding $70..

Allied Waste Industries (AW) - Republic Services, Inc. (RSG)
September 10, 2008 (9:20a) - Preliminary Proxy Statement Filed

RSG filed the first amended proxy statement for this transaction with the SEC yesterday (9/9).

Shareholder meeting details are not provided in the revised document.

Regarding the HSR second request issued on July 23, the proxy states the following:

“Both Republic and Allied are cooperating with the Antitrust Division to respond fully to the request for additional information as soon as practicable. In practice, complying with a request for additional information or material can take a significant amount of time. In addition, if the Antitrust Division raises substantive issues in connection with a proposed transaction, the parties will engage in negotiations with the relevant governmental agency concerning possible means of addressing those issues and may agree to delay completion of the transaction while those negotiations continue.”

The local overlaps in California, Georgia, North Carolina, South Carolina, and Texas continue to be the focus of this combination and, as discussed previously, divestitures are anticipated in order to obtain HSR clearance. Based on further research, it appears that the divestiture will be moderate in volume, and limited primarily to the Atlanta area, as well as various locales in California, North and South Carolina, and perhaps Texas. The focus of the DOJ is likely to be transfer stations and removal routes, as the landfill overlaps in these areas appear to face adequate municipal and/or private competition.
Based on the information available at this time, it is expected that roughly 15 to 20 divestitures will be required by the DOJ. It must be assumed at this stage that the specific units have been identified and the companies are currently in the process of indentifying buyers for the divested operations. This should not be a terribly problematic process, as there are several large and countless small/independent waste companies capable of purchasing and effectively taking over the operations.

In short, the HSR process in this situation is still believed manageable before the end of this year if the review has progressed to the point of seeking buyers. Assuming this is the case, a consent agreement should be announced before the end of November.
Naturally, Waste Management looms as a potential delaying factor as its efforts to disrupt this deal can be expected to continue over the next few months. Nevertheless, the closing projection of the AW/RSG transaction will remain at early/mid-December barring Waste Management interference.

UST Inc. (UST) - Altria Group, Inc (MO)
September 9, 2008 (11:55a) - Initial Analysis

This acquisition by MO is almost completely vertical as its presence in the smokeless tobacco market is virtually nil. Indeed, MO’s inability to establish a viable competing smokeless product under its iconic “Marlboro” brand is clearly the rationale for this transaction.

In obtaining the (also iconic) Skoal and Copenhagen brands, as wells as UST’s increasingly popular discount brands, MO will control more than half of the overall smokeless tobacco market for which it is currently not legitimate player. According to most reliable sources, UST’s current market share in the segment is roughly 58%, while Reynolds “Kodiak” and “Grizzly” products (via Conwood acquisition) have about 28% of the smokeless tobacco market. It should be noted that the FTC granted early termination of the HSR waiting period in the Conwood/Reynolds deal.
In short, this deal will also be viewed by regulators as a non-issue, as has been the case almost every other vertical combination over the last several years. This will be accentuated by the fact that UST’s flagship products (Skoal and Copenhagen). Under a more strict regulatory environment, this combination could conceivably be subject to some FTC interest due to the vertical aspects, but even then the likely outcome would be fairly quick HSR clearance. Under the present circumstance, this transaction will receive a standard 30-day HSR review, and perhaps early termination.

With respect to the SEC review, UST’s only recent encounter with the regulatory involved a 2004 quarterly report revision (Q1), which in turn resulted in a delayed annual report filing for the year ended 2003. This issue did not create any lingering problems with the SEC. Therefore, as an all-cash transaction, the companies should have no difficulty obtaining SEC clearance for the proxy materials in less than 45 days. Assuming the first proxy is filed by the second week of October, the UST shareholder meeting and close can occur in a mid/late-December time frame. A proxy waiver — which is possible in this case — would move the closing time frame to early/mid-December, but only if the first proxy is filed before the end of this month.

Huntsman Corporation (HUN) - Hexion Specialty Chemicals
September 9, 2008 (9:05a) - Delaware Chancery Court Status

Hexion’s pre-trial brief is available as part of this SEC filing.

HUN’s pre-trial brief is available as part of this SEC filing.

It will be noted that Hexion’s CFO (William Carter) testified yesterday that a combined HUN/Hexion entity would ultimately go bankrupt due to HUN’s debt and decreasing sales. Regardless of the details provided in the briefs and the various opinions contained therein, the continued claim of imminent bankruptcy by Hexion will likely resonate with the Delaware Chancery Court above all else. This is naturally a general and broad perception of the proceedings at this early stage, but one which this publication currently believes will dictate the outcome if this case continues in front of the Chancery Court.

Although HUN will certainly argue against the bankruptcy specter throughout the proceedings, it continues to be expected (tentatively) that the company will eventually realize its position in front of the Court and seek to settle the dispute before a final decision is issued.

Alpha Natural Resources, Inc. (ANR) - Cleveland-Cliffs Inc (CLF)
September 9, 2008 (8:30a) - Definitive Proxy Statement Filed (CLF Harbinger)

CLF has filed a definitive proxy statement with the SEC for the company’s October 3, 2008 special shareholder meeting to consider Harbinger Capital’s control share acquisition yesterday, September 9, 2008.

The record date for the special shareholder meeting is September 2, 2008.
Harbinger Capital also filed this definitive proxy statement for the October 3 shareholder meeting. Harbinger has added this passage to the document

“Harbinger is not seeking to control the Company. Further, there can be no assurance that, even if Harbinger obtained all of the shares contemplated by the Harbinger Share Acquisition, Harbinger would have the ability to, or would determine to, block shareholder approval of the Alpha transaction. In any event, we intend to be an advocate for the interests of shareholders, working with management, the Board, shareholders and all other interested parties to ensure that the Company explores all available alternatives for enhancing the value of its equity.”

This is a somewhat distorted position by Harbinger, as this investor clearly does intend to effectively gain control of CLF through this action. The above claim is clearly an effort to assuage undecided shareholders by softening its stance. Whether this will be effective at the October 3 shareholder meeting remains to be seen.

It is extremely likely, however, that the first shareholder meeting will result in a delay of the second shareholder special shareholder meeting to consider the merger transaction. Although no date as been set for the second meeting, adjournment will be considered on October 3 and, given the circumstances, it will be surprising if shareholders fail to vote for a postponement.

CLF to this point has not provided a very strong public relations campaign with respect to the Harbinger situation. Although the company is presumably working directly with key shareholders to fend off Harbingers share acquisition, there is absolutely no indication at this time that Harbinger’s efforts will fail. Thus, it continues to be the perception of this publication that this deal will not succeed barring increased and motivated efforts by CLF to alter the course of the company shareholders.

Huntsman Corporation (HUN) - Hexion Specialty Chemicals
September 8, 2008 (8:15a) - Status Report

As of this update, the Delaware Chancery Court trial remains scheduled to start today. This despite yet another last-ditch effort by HUN — disclosed in this SEC filing — to avert a trial via repeated shareholder commitments to provide post-closing financing.
Hexion/Apollo has not issued any statements or given any indication that it will consider the HUN shareholder initiative, nor are there any signs that settlement will occur before the start of today’s trial, as has been generally anticipated.

Nevertheless, it is difficult to believe that either side as much interest in seeing this case resolved by the Chancery Court. Assuming the trial does indeed begin today, it would not be surprising if the parties worked out a settlement after arguments are presented, but before the Court decision is issued. Again, there is very little expectation that this situation will end with a completed transaction.