Filed under: Deals

Things are getting hostile in the furniture business. That is, Pier 1 Imports (NYSE: PIR) has announced a $4 unsolicited bid for rival Cost Plus (NASDAQ: CPWM). That comes to about $88 million. On news of the deal, Cost Plus’ shares rose 13% to $3.47.

Even though, the folks at Cost Plus are skeptical, calling the deal “highly conditional.” Of course, the board will meet to discuss the proposal.

With the recession and real estate bust, it’s a good bet we’ll see more consolidation in the furniture business. Simply put, it will be a way to cut capacity as well as reduce cost structures.

No doubt, Cost Plus will want to get a higher price, but in light of the challenging environment, that’s probably going to be tough. Besides, Cost Plus and Pier 1 have many common shareholders, who might pressure for a transaction. What’s more, Cost Plus’s “poison pill” will expire on June 30th.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the internet Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Filed under: Deals, Aon Corp (AOC)

Willis Group Holdings (NYSE: WSH), the third largest insurance broker, is about to become much larger. Yes, the company has announced a $2.1 billion acquisition of Hilb Rogal & Hobbs (NYSE: HRH). The transaction is half cash and half stock. Even though, Willis plans a $1 billion buyback to sop up the shares.

Based on the financials, the deal looks smart. Willis plans to realize annualized synergies of about $140 million by 2012. What’s more, the transaction should be accretive to cash earnings on the close (which is expected in the Q4).

More importantly, Willis is prone to boost its growth. After all, there will be a doubling of North American revenues. There will also be a stronger footprint in New York, Boston, New Jersey, California, Florida, Philadelphia and Illinois. In other words, anticipate more pressure on McLennan Cos. (NYSE: MMC) and Aon (NYSE: AOC).

Something else: HRH will add expertise in key areas like personal lines, healthcare, environmental and executive risk.

No doubt, Willis is engaging in a transformative acquisition. The deal is the biggest in the sector since Marsh & McLennan’s purchase of Sedgwick Group in 1998.

There are definitely some large risks for Willis.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Filed under: Deals, Industry, Consumer experience, Competitive strategy, Apple Inc (AAPL), Wal-Mart (WMT), Apollo Investment (AINV)

Wal-Mart (NYSE: WMT) is cutting exclusive deals with major artists in a play to improve traffic to its stores and on the internet operations.

According to The New York Times, “Wal-Mart was the largest music retailer in the country last year, so musicians (and their labels) are eager to maintain good relationships, appearing in the special concerts for the chain, which are also open to the public.”

But The Wall Street Journal had a much superior picture of what’s going on. Rock band AC/DC is about to announce a partnership with Wal-Mart in which it will sell its new album only in the largest retailer’s stores. The paper writes, “The AC/DC deal, however, comes at a time when the retail giant — the largest seller of compact discs in the nation — is signaling it might rock the music world by stocking fewer CDs.”

Both papers point out that the deal will hurt music labels that count on CD sales, but neither shows the extent to which Wal-Mart is becoming the unlikely largest competitor to Apple (NASDAQ: AAPL)’s iTunes. AC/DC’s music won’t be found there.

Media companies can’t stand up to Apple, but in an odd twist, the world’s largest retailer can.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

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Filed under: Deals, Sprint Nextel Corp (S), Verizon Communications (VZ)

Now that Verizon Wireless has concurred to purchase privately held Alltel from its private equity owners (giving them a small profit and an out), what else is on tap for the soon-to-be largest wireless carrier in the U.S.? Verizon Wireless is chomping at the bit to overtake AT&T Inc. (NYSE: T) as the largest wireless carrier in the U.S., and its acquisition of Alltel will give it an 8 million+ wireless subscriber advantage over Ma Bell.

Although Alltel’s buyout by Verizon was expected last year, it’s now going to finally happen. Both companies use the same technical wireless standard, so this will be an simple merger. There will be no issues like when Sprint merged with Nextel in 2005 and the two incompatible networks caused an epic failure of those two companies to merge into one. Speaking of Sprint Nextel Corp. (NYSE: S), where does it play into the Verizon-Alltel landscape? Does its WiMAX plans now become derailed with the Verizon announcement, adding more insult to injury about the say of the company?

If anything, look for Verizon to take a strong look at buying Sprint Nextel shortly after its deal with Alltel closes. There would be way more regulatory scrutiny than the Alltel deal (overlapping markets, etc.), but a one-two knockout punch like this would make Verizon Wireless the pre-eminent wireless carrier in the U.S. for a long time. AT&T would have no choice but to plead with Deutsche Telekom to buy T-Mobile USA, the nation’s fourth-largest wireless carrier, and one who also shares the same type of technical network as AT&T. Perhaps 2009 will see some of the neatest consolidation in the wireless world yet.

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Filed under: Before the bell, Deals, Law, Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), Hewlett-Packard (HPQ), Johnson and Johnson (JNJ), Boeing Co (BA), Amer Intl Group (AIG)

Before the bell: Stocks could rebound

The day has finally come. June 9 is here and Apple (NASDAQ: AAPL)’s Steve Jobs is expected to announced a new 3G iPhone in his keynote speech during the annual developers conference in San Francisco. The features of a new iPhone have been the subject of much speculation, all to be settled this day, one way or the other. A new business model is also expected with subsidies paid by wireless carriers.

Boeing Co (NYSE: BA) said on Monday its 787 Dreamliner would make its first flight in the fourth quarter of 2008, on schedule according to the revised timeline announced in April for the new aeroplane’s launch. First deliveries of the plane were scheduled for the third quarter of 2009, also as previously stated.

American International Group Inc (NYSE: AIG)’s CEO, Martin Sullivan, is facing dissent from three massive shareholders who together control 4%, as reported Sunday on The Wall Street Journal. They sent a letter to the board regarding management improvements.

After Google Inc. (NASDAQ: GOOG) had done it, Microsoft Corp. (NASDAQ: MSFT) wants to as well. Microsoft and Kaiser Permanente, the biggest U.S. health maintenance organization (HMO), are working on a patient information exchange pilot program to help give patients more control over their health records. Google Health was launched in February.

Britain’s Astex Therapeutics, a privately owned biotech company, has signed a cancer drug research deal with Johnson & Johnson (NYSE: JNJ) potentially worth more than $500 million in milestone payments. “The deal grants a worldwide licence to J&J’s Janssen unit to develop and commercialise compounds arising from Astex’s FGFR inhibitor programme and establishes a novel drug discovery programme focused on two further cancer drug targets.”

Hewlett-Packard Co (NYSE: HPQ) stated on Sunday it had settled patent litigation with smaller Taiwan rival Acer.

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Filed under: Earnings reports, Forecasts, Deals, Merrill Lynch (MER), Morgan Stanley (MS), Lehman Br Holdings (LEH)

Lehman (NYSE: LEH) is about to announce that it has raised $5 billion, most of it from US investors. The New Jersey Division of Investment may take the largest piece of the action.

According to The Wall Street Journal, “The move comes as the firm is set to report a second-quarter loss of more than $2 billion, this person stated. Until recently, most analysts who follow Lehman have been predicting a loss of about $300 million.”

And, that’s the heart of the story. Lehman is the canary in the coal mine.

If losses at Lehman Bros. are roughly eight times greater than expected, it means that the number for firms like Merrill Lynch (NYSE: MER) and Morgan Stanley (NYSE: MS) are prone to be extremely poor. Most firms suffer from the same exposure to bad paper, especially mortgage lending derivatives. The hope that things were getting superior in the financial sector of the market turns out to be bogus.

It also raises the subject anew of what huge banks and brokerages will do if they’ve to go back to the market for money. Sovereign funds may not be willing to take another round of risk. The fewer the number of available investors, the worse the terms. And, the tougher it is on current shareholders.

Douglas A. McIntyre is an editor at 247wallst.com.

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