Filed under: Deals

One of my favorite restaurants is Romano’s Macaroni Grill, which has a great ambiance and menu. Well, the private equity firm — Golden Gate Capital - also likes the place. In fact, it has concurred to pay $131.5 million for a majority stake. The current owner is Brinker International Inc. (NYSE: EAT), which is the operator of Chili’s Grill & Bar, Maggiano’s Little Italy and On The Border Mexican Grill & Cantina.

Romano’s has 226 locations across the U.S. But while they are high-quality, the fact remains that the current economic environment has had a dampening effect and in the prior quarter same-store sells fell 5.7%. Brinker has actually tried to sell the division for about a year. Interestingly enough, there will also be an impairment charge for $42 million to $47 million on the transaction.

Brinker will keep a 20% position. But the most important thing is that the company will get a nice slug of cash - which is certainly much desired nowadays.

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

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Filed under: Deals, Rumors, Lehman Br Holdings (LEH), Recession

Lehman Brothers Holdings Inc. (NYSE: LEH) Chief Executive Richard Fuld is running out of rabbits to pull out of his hat.

The troubled Wall Street bank, which reportedly is set to take a $4 billion write down in the third quarter, is desperate to raise capital. The Wall Street Journal says it’s shopping around its investment management business, which includes Neuberger Berman. During the second quarter, the business reported net revenue of $800 million, down from $1 billion a year earlier. Its assets under management were $277 billion. Though these results were hardly spectacular, they stood in contrast to the Capital Markets business, which reported negative revenue of $2.4 billion.

Selling the asset management business would bring in between $8 billion and $10 billion, according to analysts cited by the Journal. Lehman’s market capitalization now stands at about $10.4 billion thanks to the 77% decline in the stock price this year.

“Any change in the unit’s ownership structure would be bittersweet for Lehman,” according to the Journal. “The division has been a strong performer ever since Lehman bought it in 2003, holding up well despite the mortgage crisis. While a sale would give Lehman a cash infusion, the investment bank would lose a steady source of revenue.”

Lehman acquired Neuberger for $2.6 billion in 2003, and some unhappy Neuberger executives are eager to dump their shares, the paper said.

Not all investors, however, believe that all hope is lost. Lehman’s shares rose Friday on a report that billionaire George Soros boosted his stake in the company.

If the sale goes through, there is no way that Lehman will be able to remain independent.

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Filed under: Deals, Electronic Arts (ERTS), Activision Inc (ATVI)

Can you believe the drama going on between Electronic Arts (NASDAQ: ERTS) and Take-Two Interactive (NASDAQ: TTWO) has dragged on for this long? I can’t. According to this article, EA has let its current bid expire and intends on checking out additional stats behind the company in an effort to think more about what Take-Two has to offer and what its true value might be. The company behind the Grand Theft Auto series of mature-rated games is offering to give EA a presentation that includes non-public data.

EA really wants this deal. So does Take-Two. EA believes that it needs a super-franchise that goes beyond its sports dominance, and it feels that Grand Theft Auto would be one heck of an asset to own. It’s true. EA would probably benefit from the title, and it might get the company’s stock out of its current doldrums. And in a world where Activision Blizzard (NASDAQ: ATVI) is benefiting greatly from an acquisition and a merger — Guitar Hero and Vivendi Games, respectively — one cannot blame EA, I suppose, for keeping the dream alive.

EA is in something of a bad spot because, at this point, it probably will have to raise the bid on Take-Two. I think the market will ultimately be disappointed if EA doesn’t get Grand Theft Auto (and BioShock, for that matter). It will be perceived as a failure on management’s part, and shareholders will wonder where the growth will be coming from, and what catalysts can be counted on to drive the stock price higher in this tough economic environment.

Could EA survive without this merger? Sure. But investors on both sides want this deal to go through, and I think the ego of EA’s management will be bruised if some kind of a transactions doesn’t get consummated. I suppose their ego is already bruised considering that the tender offer’s timeframe has come and gone. EA is simply going to have to take into account paying up to finish this integration.

On the stock side of things, I wouldn’t purchase shares of either company. EA probably will, in my view, raise its offer at some point. It’s a gamble, though. Besides, I’ve already made money on Take-Two. I sold long ago when the buyout was announced. There’s no reason for me to revisit this past trade. I own Activision Blizzard in my portfolio, and that’s good enough for me.

Disclosure: I own Activision Blizzard; positions can change at any time.

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Filed under: Before the bell, Earnings reports, Deals, Apple Inc (AAPL), Hewlett-Packard (HPQ), Intel (INTC), Home Depot (HD), Market matters, Target Corp. (TGT), Advanced Micro Dev (AMD), Federal Natl Mtge (FNM), Lowe’s Cos (LOW), Staples Inc (SPLS), Economic data, Oil, Lehman Br Holdings (LEH), General Dynamics Corp (GD)

U.S. stock futures were lower Tuesday morning, indicating stocks would likely begin the same. Investors’ concerns about the financial sector dampened sentiment, but oil prices continued to decline and could offset some of the negative mood. Still, housing and inflation data are on tap before the market opens today. And of course earnings with The Home Depot already beating investors’ expectations this morning but with Staples issuing a warning.

A day after smaller Lowe’s (NYSE: LOW) reported a profit drop, The Home Depot (NYSE: HD) followed suit, reporting a 24% profit decline for the second quarter. It held onto its earnings outlook as second-quarter net fell 24% to $1.2 billion, or 71 cents per share. Sales declined 5.4% to $21 billion. Analysts had projected earnings per share of 61 cents on revenue of $20.58 billion. Home Depot shares rose 2% in premarket trading.

General Dynamics (NYSE: GD) announced it is buying Switzerland’s Jet Aviation for about $2.25 billion cash to expand its business-aviation services.

Intel Corp. (NASDAQ: INTC) is set to show off today a new chip that directly controls the memory in computers, invading one of the last market niches dominated by Advanced Micro Devices Inc. (NYSE: AMD). By combining the memory and processing functions into a single chip it can help pull up data and perform calculations faster as well as improve handling of video and sound files, and share work among computers. Intel could once again take the lead over AMD here.

The financial sector will remain the one investors are most concerned about, and many stocks will likely see some volatile trade. CNBC and Bloomberg both came out saying that the credit crisis is only half through and could get worse.
After Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) dropped massive Monday due to a report suggesting the U.S. Treasury is urging both to raise more capital which is expected to wipe out stockholders, both stocks are up in premarket trading, but that could change in a heartbeat.

And following so many problems with its MobileMe software, Apple Inc. (NASDAQ: AAPL) has offered MobileMe subscribers a free 60-day extension of their current subscription.

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