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Filed under: Deals, Internet, Competitive strategy, Microsoft (MSFT), Yahoo! (YHOO), Technology

Discretion is the superior part of valor — that’s what I was always taught. Perhaps the time for a strategic withdrawal has come in the battle of Microsoft Corp. (NASDAQ: MSFT) vs Yahoo Inc. (NASDAQ: YHOO). Somehow, though, I can’t envision it will take that turn, as I read the analysts, strategists and pundits. How could it have become so adversarial? Surely something unsightly may be at hand.

Did Steve Ballmer imagine this type of scenario when launching his original bid for Yahoo? Did he ever envision the attempted synergy would become a battle of wills as much as money? To what degree does pride factor into this pending recipe for disaster? I dare state that is what it has all come down to now. Pride goes before a fall, they state.

Does Steve Ballmer have the grace within him to fold his tents and quietly withdraw? Or shall his siege works be lain against the walls of Yahoo in an attempt to forcibly take it? Already he has warned that he’ll appeal to the sensibilities of Yahoo’s investor rank and file. It’s a tactic which has been used in many a war. However, attempting to romance the populace away from their leaders seldom, if ever, has worked. In the meantime, Microsoft’s own shares are on the decline, diluting the strength of its acceptable offer.

I submit to you that at this time Microsoft should disengage from the situation entirely. Giving Yahoo some time to fully digest the reality of what it is facing might be a worthwhile strategy. To force the matter any further right now may only lead to the degradation of the reputations of both companies. That’s something that no one desires.

The powerful silence emanating from an adversary which has quietly withdrawn places nothing but unanswerable questions on the horizon.

Gary Sattler is a freelance blogger. He does not knowingly have interest in the companies mentioned in this blog post.

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Filed under: Deals, Blackstone Group L.P (BX)

Since 1992, the The Blackstone Group L.P. (NYSE: BX) has been a top real estate investor with 229 transactions for over $132 billion. With lots of firepower remaining, the firm is striking yet more deals.

The latest is for Synergy, a major real estate development and management firm in India.

The investment amount comes to $18 million, relatively low for the folks at Blackstone, but it’s a highly strategic deal.

Synergy has developed a variety of projects - spanning 100 million square feet — for office buildings, hospitals, hotels and so on. In other words, the firm should be a nice way to source lucrative deals in the fast-growing Indian market.

Tom Taulli is the author of various books, including The Complete M&A Handbook (www.mergerbook.com) and is also a principal in Averiware, which provides an ERP system to small and midsize businesses.

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Filed under: Deals, Berkshire Hathaway (BRK.A), Hershey Co (HSY), Wrigley, (Wm) Jr (WWY)

Shares of Hershey Co. (NYSE: HSY) have jumped more than 6% on the news of the $23 billion takeover of Wm. J. Wrigley Co. (NYSE: WWY) by Mars Inc. and Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A) as investors bet that the maker of the eponymous chocolate bar won’t stay independent for long.

Hershey, though, is a basket case thanks to soaring commodity costs and hopefully the growing interest in healthier eating. That will heighten the pressure on Hershey management to do a deal with Cadbury Schweppes Plc. or find another sugar daddy (pun intended).

The case for a merger between Cadbury and Hershey are pretty compelling as Reuters notes.

“The deal would have clear strategic logic, as Cadbury, the world’s biggest confectionery group, lacks presence in the U.S. chocolate market, while Hershey is looking to expand overseas,” according to the news service.

During the first quarter earnings conference call, Chief Executive David West sounded upbeat, saying the company was “making progress, while it is slower than we would like, we do see the initial signs of improving marketplace trends.” He has high hopes for new products such as the Hershey Bliss. Investors, though, may not be patient.

The Hershey Trust Co., the chocolate company’s largest shareholder, has resisted buyout offers in the past from Wrigley and has vowed to keep the company independent. You have to figure that the trust’s board will change its tune at the right price.

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Filed under: Deals, Berkshire Hathaway (BRK.A), Wrigley, (Wm) Jr (WWY)

On CNBC this day, Warren Buffett talked about politics, foreign currency - and oh, his financing of Mars’s $23 billion deal for Wrigley (NYSE: WWY). He likes the deal for a variety of core reasons: a sustainable long-term business, strong management and the fact that the business is something that’s simple to comprehend (chewing gum is fairly basic, right?)

Yes, this is vintage Buffett.

As usual, the deal started with a phone call to the oracle of Omaha, and he wasted tiny time in getting things moving.

Wrigley is the largest maker of gum and Mars is a big maker of candies, with Snickers, M&Ms and so on in its arsenal of products. In all likelihood, this deal will spur further M&A activity in the global sector. Such deals will help companies deal with spiking commodities’ prices as well as the difficulties in creating new brands.

What’s more, both Wrigley and Mars are family dynasties. The former got its start in 1891 and the latter was launched in 1911. Basically, for such firms to link up, it’s important that the principals comprehend the complexities of family dynamics. And, for the most part, Buffett seems to understand such things. In other words, he is a value-added investor who takes the long view. More importantly, he has a war chest of over $40 billion. So as time goes by - and more family businesses look to consolidate — I’m sure Buffett will get more phone calls.

Tom Taulli is the author of various books, including The Complete M&A Handbook (www.mergerbook.com) and is also a principal in Averiware, which provides an ERP system to small and midsize businesses.

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Filed under: Deals, Berkshire Hathaway (BRK.A), Wrigley, (Wm) Jr (WWY), Options

Mars Inc. and Warren Buffett’s Berkshire Hathaway (NYSE: BRK.B) were close to a pact to acquire WM. Wrigley Jr.Co (NYSE: WWY) for more than $22 billion according to people familiar with the situation at The Wall Street Journal.

WWY over all option implied volatility of 24 is near its 26-week average according to Track Data, suggesting non-directional price risk.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Earnings reports, Deals, Ford Motor (F), General Motors (GM)

Ford Motor Co. (NYSE: F) Chief Executive Alan Mullaly has a friend in cantankerous billionaire Kirk Kerkorian.

Kerkorian, who was Chrysler’s largest shareholder before the company was acquired by Daimler, is snapping up shares in the automaker, which recently posted an unexpected $100 million first quarter profit. Kerkorian’s Tracinda Corp. owns a 4.7% position in Ford and plans to offer to purchase as much as 20 million shares at a 13% premium to Friday’s close, according to The Wall Street Journal (subscription required).

“Tracinda has been following Ford closely since the company released its fourth quarter 2007 results which indicated that Ford’s management was starting to achieve highly meaningful traction in its turnaround efforts,” the company stated in a statement. “Last week this was reinforced by Ford’s first quarter 2008 results, achieved despite the difficult U.S. economic environment. Tracinda believes that Ford management under the leadership of Chief Executive Officer Alan Mulally will continue to show significant improvements in its results going forward.”

At least that’s how Kerkorian feels now.

In 2000, Kerkorian opposed the merger of Daimler and Chrysler, which at the time was heralded a triumph of trans Atlantic deal-making. Last year, he made a $4.5 billion bid to purchase Chrysler from DaimlerChrysler that was rejected. Kerkorian also tried to take over General Motors Co. (NYSE: GM) in 2005.

For now, Ford management is putting a positive spin on Kerkorian’s move, saying it welcomes “confidence in Ford and the progress we are making on our transformation plan.” The company’s shares also are soaring in pre-market trading.

Privately, they must be wondering what the 90-year-old is up to. It’s difficult to believe that he’s going to remain on the sidelines and count his money.

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Filed under: Deals, Ford Motor (F), Options

Ford (NYSE: F) is recently trading at $8.23 in pre-open trading, above its close of $7.50.

Tracinda Corporation announced it intends to make a cash tender offer for up to 20 million shares of common stock of F at a price of $8.50. Tracinda currently owns 100 million shares of F, representing approximately 4.7% of the outstanding shares.

F Might option implied volatility of 61 is above its 26-week average of 54 according to Track Data, suggesting more massive price movement.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Deals, Industry, Berkshire Hathaway (BRK.A), Wrigley, (Wm) Jr (WWY)

Why it makes sense to merge two big candy companies is a mystery. Nonetheless, Berkshire Hathaway (NYSE: BRK.A) and privately held Mars plan to spend $22 billion to purchase gum company Wrigley (NYSE: WWY).

According to The Wall Street Journal, “Terms of the deal weren’t immediately clear, but Wrigley has a stock market value of about $17.3 billion and it appeared that the buyers were prepared to offer a rich premium.”

Wrigley does well outside the US while Mars does well in the domestic market.

What exactly Buffett and Mars get is unclear. The buyout would be at a price near the company’s two-year high. The gum company’s profits and revenue have been steadily rising, but it is not a spectacular growth business.

There would not appear to be a lot of redundant costs between the two firms. One makes mostly chocolate and the other, gum. It is questionable that they can benefit from one aother’s distribution networks. Both brands are widely available in the US and overseas.

Warren Buffett usually does well with his investments. How this one will work out is difficult to divine.

Douglas A. McIntyre is an editor at 247wallst.com and writes Ten Stocks Under $10.

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Filed under: Before the bell, Earnings reports, Deals, Launches, Consumer experience, Competitive strategy, Google (GOOG), Apple Inc (AAPL), Ford Motor (F), IAC/InterActiveCorp (IACI), Verizon Communications (VZ), Harley-Davidson (HOG)

Before the bell: Futures higher following deal news; investors await Fed move

Kirk Kerkorian’s Tracinda Corp. is planning to offer $8.50 per share for up to 20 million shares of Ford Motor Co. (NYSE: F), a 13.3% premium over Friday’s close. Tracinda now owns 100 million Ford shares, or 4.7% of the outstanding stock, which would increase to 5.6% when the offer is finished. Ford shares climbed over 6.5% in premarket trading. The deal, announced recently, is helping stock futures’ upward movement.

Verizon Communications Inc. (NYSE: VZ) reported a 9.8% rise in its first-quarter earnings as its wireless division attracted more customers than other carriers. Excluding items, earnings were 61 cents per shares, inline with estimates. Revenue rose 5.5% to $23.8 billion, also inline with estimates. VZ shares are up 1.9% in premarket trading.

According to The New York Post, Barry Diller and Liberty Media (NASDAQ: LINTA) Chairman John Malone are continuing to talk about “a deal that would trade one or more of IAC Interactive (NASDAQ: IACI)’s assets for Liberty’s ownership stake in IAC.” Diller is also “expected to meet with his board this week to restart the process of breaking up his company into five separate pieces.”

Visa Inc. (NYSE: V) shares are up almost 2% in premarket trading as the world’s largest credit-card processor is expected to post quarterly results late in the day and report strong profits for the second quarter.

Harley-Davidson, Inc. (NYSE: HOG) raised the quarterly dividend 10% to 33 cents a share, payable June 20 to holders of record June 5.

The New York Times reports that Google Inc. (NASDAQ: GOOG) researchers “have a software technology intended to do for digital images on the Web what the company’s original PageRank software did for searches of Web pages.” VisualRank is an algorithm that blends “image-recognition software methods with techniques for weighting and ranking images that look most similar.”

And the latest on the 3G iPhone Apple Inc. (NASDAQ: AAPL) is expected to launch soon comes from a company, Foxconn Electronics (Hon Hai Precision Industry), which has reportedly landed orders for the assembly of the much talked about iPhone. Shipments, it is said, are to start in June this year, for three million units, but total shipment is expected to be 24-25 million units throughout its life-cycle. Foxconn is currently the sole manufacturer of first-generation iPhones.

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