MAJOR PAPERS:

• Warren Buffett's Berkshire Hathaway Inc (NYSE: BRK.A) and Mars are in talks to purchase Wm. Wrigley Jr. Co. (NYSE: WWY) for over $22B, the Wall Street Journal reported. An announcement may come as soon as today.
• The Royal Bank of Scotland Group Plc (NYSE: RBS) will start the integration of ABN Amro Holding's (NYSE: ABN) investment bank into its global markets division, the Financial Times reported. This process will most likely result in the paring of 7,000 jobs.

OTHER PAPERS:

• According to the New York Post, IAC/InterActiveCorp. (NASDAQ: IACI) Chairman Barry Diller is expected to meet with his board this week to restart the process of breaking up his company into five separate pieces, sources said. At the same time, Diller and Liberty Media Corporation (NASDAQ: LMDIA) Chairman John Malone are continuing to talk about a deal that would trade one or more of IAC's assets for Liberty's ownership stake in IAC.
• The UK Times has learned that Numis Securities, the stockbroking group headed by Michael Spencer, is in "advanced talks" to buy the UK equities business of The Bear Stearns Companies Inc (NYSE: BSC). Numis may look to hire a team of 25 from Bear.

MOST NOTEWORTHY: Clayton, PharmaNet Development, Royal Bank of Scotland, Progressive Gaming and WSFS Financial were today's noteworthy downgrades:

• JMP Securities downgraded shares of Clayton Holdings Inc (NASDAQ: CLAY) to Market Perform from Outperform citing lack of visibility in the non-agency MBS market. William Blair also downgraded shares to Market Perform from Outperform after the company's in-line quarter, to reflect lowered estimates and uncertainty regarding a recovery time.
• Jefferies downgraded shares of PharmaNet Development Group Inc (NASDAQ: PDGI) to Hold from Buy as they believe departures of board and management executives have introduced new risk.
• The Royal Bank of Group PLC (NYSE: RBS) was lowered to Sell from Buy at Citigroup, as they are negative on the company's acquisition of ABN Amro Holding NV (NYSE: ABN).
• ThinkEquity downgraded shares of Progressive Gaming International Corporation (NASDAQ: PGIC) to Accumulate from Buy following Friday's announcement that it lost its post-trial motions and will proceed to appeals court in the Webb lawsuit. PGIC will have to post a $20M bond, which is more than the firm expected.
• B. Riley downgraded shares of WSFS Financial Corporation (NASDAQ: WSFS) to Neutral from Buy after they lowered their estimates to reflect the company's higher projected on-interest expense.

OTHER DOWNGRADES:

• Goldman removed Hewlett-Packard Company (NYSE: HPQ) from its Conviction Buy List.
• Calyon downgraded VeraSun Energy Corporation (NYSE: VSE) to Add from Buy.
• Merrill Lynch downgraded Aetna Incorporated (NYSE: AET) to Neutral from Buy.
• Friedman Billings downgraded Baker Hughes Incorporated (NYSE: BHI) to Market Perform from Outperform.

MOST NOTEWORTHY: Banco Santander, Solera, FTI Consulting and Blue Coat Systems were today's noteworthy initiations:

• Societe Generale expects the Banco Santander's (NYSE: STD) strong organic growth in earnings to continue with the purchase of ABN Amro's (NYSE: ABN) assets in Brazil and Italy, starting shares off with a Buy rating. Shares were started at Merrill Lynch with a Neutral rating.
  
• William Blair initiated Solera Holdings (NYSE: SLH) with an Outperform rating, as they believe underlying trends for auto insurance claims are favorable.
  
• FTI Consulting (NYSE: FCN) was initiated at Deutsche Bank, as they believe the company is positioned to sustain double-digit growth, and with a Buy rating and $65 target and at Goldman with a Neutral rating and $62 target.
  
• Pacific Crest initiated Blue Coat Systems (NASDAQ: BCSI) with a Sector Perform rating on valuation and estimates fair value at $50/share.

OTHER INITIATIONS:

• BNP Paribas started shares of China Netcom (NYSE: CN) and China Telecom (NYSE: CHA) with Buy ratings and China Mobile Limited (NYSE: CHL) with a Hold rating.
  
• Cosan Limited (NYSE: CZZ) was initiated with a Neutral rating at Goldman.
  
• Methanex Corporation (NASDAQ: MEOH) was started at HSBC with an Overweight rating.

MOST NOTEWORTHY: Banco Santander, Acorda Therapeutics, Agruim, Annaly Capital and ImmunoGen were today's noteworthy upgrades:

• UBS upgraded shares of Banco Santander (NYSE: STD) to Buy from Neutral as they expect the acquisition of ABN Amro Holding NV (NYSE: ABN) assets in Brazil and Italy to boost earnings in 2008 and 2009.
  
• Friedman Billings added Acorda Therapeutics (NASDAQ: ACOR) to its Top Picks List, as they have confidence in fampridine-SR's safety profile.
  
• Agrium (NYSE: AGU) was upgraded to Sector Outperformer from Sector Performer at CIBC on valuation, as they believe the outlook for wholesale and retail is robust with all three nutrients at historical high levels.
• Annaly Capital Management (NYSE: NLY) was upgraded to Buy from Neutral at UBS, citing likely further FED cuts, benefits from recent secondary, and BVPS growth.
  
• RBC Capital upgraded shares of ImmunoGen (NASDAQ: IMGN) to Outperform from Sector Perform based on valuation, growing pipeline, valuable technology platform, and potential as an acquisition candidate.

OTHER UPGRADES:

• Soleil upgraded ExpressJet Holdings (NYSE: XJT) to Hold from Sell.
  
• Goldman upgraded Assurant (NYSE: AIZ) to Buy from Neutral.
  
• Merill upgraded Forest Labs (NYSE: FRX) to Buy from Neutral.
  
• Citigroup upgraded Domtar (NYSE: UFS) to Buy from Hold.

Before the bell: Waiting for jobs report, futures

British bank Barclays PLC (NYSE: BCS) withdrew its takeover offer for ABN Amro Holding NV (NYSE: ABN) on Friday, saying not enough shareholders tendered their shares. This leaves a consortium led by Royal Bank of Scotland PLC in position to buy ABN Amro in a deal worth €70.5 billion (US$99.9 billion), the largest takeover in the history of the financial industry.

Yahoo! Inc. (NASDAQ: YHOO) shares are up over 2.2% in premarket trading after Alibaba.com Corp., a unit of China's Alibaba Group, which is partly owned by Yahoo! won approval from the Hong Kong Stock Exchange to sell up to $1 billion worth of shares in its long-anticipated IPO.

The U.S. attorney in Brooklyn is investigating the collapse of two mortgage-related Bear Stearns (NYSE: BSC) hedge funds whose failure this summer cost investors an estimated $1.6 billion, according to the Wall Street Journal. The criminal probe is in the early stages and has yet to generate subpoenas.

Spring Nextel Corp. (NYSE: S) shares are up over 2% in premarket trading after the Wall Street Journal reported it has quietly launched a hunt for a successor to CEO [subscription] Gary Forsee amid investor pressure. The board hopes to name a new leader by early December.

Alcoa Inc. (NYSE: AA) announced yesterday it would take charges of $845 million as it closes in on the sale of two businesses - packaging and consumer products, and automotive castings - enabling it to focus on new growth opportunities.

According to FORTUNE, Apple Inc. (NASDAQ: AAPL) "there are signs that that Steve Jobs may be set to open the iPhone up to outside programmers - or at least those who agree to obey his rules."

Rio Tinto (NYSE: RTP) shares are up nearly 1.5% in premarket trading despite being downgraded to Hold from Buy by ABN Amro, mostly on valuation.
Wachovia Securities downgraded Monster Worldwide, Inc. (NASDAQ: MNST) to Market Perform from Outperform, citing recent evidence of a slowdown in its North America Careers division.
Walgreen Co. (NYSE: WAG) was downgraded to Sell from Buy at Banc of America Securities.

MAJOR PAPERS:

• Mattel Inc (NYSE: MAT) is expected to soon announce another recall of toys made in China, reported the Wall Street Journal.
• Merck and Co. Inc (NYSE: MRK) CFO Judy Lewent sold 200K shares for $10.3M from July 26 through Aug. 7, at an average price of $51.31 per share, reported Barron's Online's "Inside Scoop" column.
• The Royal Bank of Scotland (OTC: RBSPY)-led consortium seeking to purchase Dutch bank ABN Amro Holdings NV (NYSE: ABN) raised its stake in ABN to more than 3% between Friday and Monday, reported the Financial Times.

OTHER PAPERS:

• The Independent reported that Barclays' (NYSE: BCS) bid for Dutch bank ABM Amro was approved by the Netherlands' Ministry of Finance yesterday.
• A highly publicized civilian nuclear deal with the U.S. still allows India to test nuclear weapons, according to Prime Minister Manmohan Singh, reported the Associated Press.

MAJOR PAPERS:

• Liberty Global Inc's (NASDAQ: LBTYA) John Malone may bid on Virgin Media Inc (NASDAQ: VMED), the UK's biggest cable company, reported the Wall Street Journal.
• The controlling shareholders of Dow Jones & Company Inc (NYSE: DJ) -- the Bancrofts -- are still debating whether or not to accept Rupert Murdoch's New Corporation's (NYSE: NWS) $5B offer to buy the company, and the debate is still too close to call, reported the Wall Street Journal.
• Even a nine cents a drink price hike may not help Starbucks Corporation (NASDAQ: SBUX) slumping share price, down about 20% this year, reported the Wall Street Journal.
• Dutch bank ABN Amro Holdings NV's (NYSE: ABN) boards today refused to endorse either of two competing bids for the bank, effectively taking a neutral position on the issue, reported the Financial Times.

OTHER PAPERS:

• Theme park operator Cedar Fair Entertainment (NYSE: FUN) has reportedly entered into quick- moving negotiations with investment firm Destiny Capital Solutions about a $4.1B takeover of the theme park operator, reported the New York Post.
  

So far this morning, stock futures have indicated various direction, with futures around 7:15 indicating a flat to lower open for U.S. markets as the Street tried to today recover from last week, the worst in over four years.

Last week, the Dow Jones Industrial average dropped 4.2%, the S&P 500 5% and the Nasdaq Composite 4.6%. While no fundamentals have changed significantly, on the contrary, GDP and inflation numbers were surprised on the upside, it was the continued credit crunch problems that caused investors to worry about deal making going forward.

This morning, however, futures got a boost from international markets. Asian markets finished mostly higher and European shares at first made modest gains on Monday morning following several announced deals. European shares have changed direction and are now back in negative territory though.

While there are no economic reading today, this week will see several, including jobs report, inflation indicators and personal income and spending among others.

In corporate news, ABN Amro Holding NV (NYSE: ABN) dropped its support for a takeover offer by Barclays PLC (NYSE: BCS). The bank will also not the Royal Bank of Scotland PLC bid either, thus adopting a neutral position.

There is still a busy week of earnings ahead with Verizon (NYSE: VZ) and Sun Microsystems (NASDAQ: SUNW) reporting today.

Archer Daniels Midland Co.(NYSE: ADM) already reported quarterly profit that more than doubled due to one-time gains, though ethanol sales volume declined.

MAJOR PAPERS:

• Bear Stearns Companies Inc (NYSE: BSC) says that its two hedge funds tied to subprime loans are basically worth nothing, reported the Wall Street Journal (subscription required).
• An "error in judgment" is what Whole Foods Market Inc (NASDAQ: WFMI) chairman and CEO John Mackey called his anonymous blogging about his company and rival Wild Oats Markets Inc (NASDAQ: OATS) in an apology, reported the Wall Street Journal.
• SEC chairman Christopher Cox wants Congress to tighten its oversight of the $2.4T municipal bond market, the result of increasing complexities in the bond market and lax leadership at a number of firms, reported the Wall Street Journal.

OTHER PAPERS:

• Kohlberg Kravis Roberts is planning to offer $24M to acquire Macy's Inc (NYSE: M), according to Women's Wear Daily (subscription required).
• The U.K. Times reported that Barclays plc (NYSE: BCS) has deided against raising its bid for ABN Amro Holdings (NYSE: ABN).
• Honda Motor Co. (NYSE: HMC) is increasing its production capacity in North America and in other places, in order to meet growing demand for its fuel-efficient cars and to maintain momentum for global growth, reported the Associated Press.

Stock futures indicate a lower start on Wall Street this morning after Friday's record close and last week's rally. As investors prepare for a bombardment of earnings this week, they also eye rising oil prices and the upcoming Fed chairman Bernanke's testimony this week.

Last week, U.S. stocks posted strong gains as they reached another record level when the Dow Jones Industrial Average came close to the 14,000 level (less than a hundred points to go). General Electric Co.'s (NYSE: GE) earnings and the rise in consumer-confidence helped boost sentiment.

Today, already Mattel (NYSE: MAT) reported earnings this morning that beat estimated profits by a cent.
This week, investors will get a chance to hear reports from many large caps on Wall Street, many of them tech and financials including Microsoft, Intel, Citigroup, Merrill Lynch, Google and Yahoo!. Eleven of the 30 stocks that make up the Dow industrials will report this week.

Also this week, Federal Reserve Chairman Ben Bernanke will give two days of semiannual testimony on U.S. monetary policy before Congress. No doubt, the housing market and inflation will be in focus, as well as the overall economy.

The key economic release today will be the July NY Empire State Index, a survey of manufacturing in the area, which is expected to have fallen. The release will be at 8:30 a.m.

Overseas, Asian shares mostly closed lower on Monday. European stocks rose for a third day in morning trading, but have changed direction in the past hour. The euro continued to gain against the dollar to yet another record high.

Corporate news:

It seems the consortium led by Royal Bank of Scotland will have a fresh bid as it raises the cash component of its €71.1 billion ($98 billion) bid for ABN Amro (NYSE: ABN).

IHOP Corp. (NYSE: IHP) said it would acquire fellow Applebee's International Inc. (NASDAQ: APPB) for about $1.9 billion in cash or $25.50 per share of Applebee's. The two sides pegged the total value of the deal at $2.1 billion.

Vodafone Group Plc (NYSE: VOD) is considering a $160 billion takeover bid for Verizon Communications Inc. (NYSE: VZ) according to the Financial Times. While there is no certainty this will go forward, Verizon shares rose 1.9% in premarket trading.
Update: Vodafone says it has no plans to bid for Verizon.

Ford Motor Co. (NYSE: F) denied reports in The Sunday Times that it is putting its Volvo unit up for sale and said it is not negotiating with anyone to sell the Swedish automaker.

Finally, Christopher Bancroft, part of the Bancroft family that controls Dow Jones (NYSE: DJ), is trying to block a takeover by News Corp. (NYSE: NWS).

In a move to improve its bid for ABN Amro (NYSE: ABN), a group lead by the Royal Bank of Scotland will improve the cash portion of its offer from 79% to 93% of the offer price of $98 billion. The bid is already slightly higher than the one made by Barclays (NYSE: BCS).

In many ways the Royal Bank bid makes more sense. It has teamed with Spanish bank Santander and Dutch financial firm Fortis, and they plan to break ABN into parts with each company taking the units that best match its operations and geography.

If the RBS bid is successful it could put other large banks in Europe and North America into play just as the industry may be facing a period of earnings problems led by mortgage quality problems and slower private equity deal flow.

Merging banks into the teeth of a slowdown may actually make sense. Combined banks could save money with eliminating back office and duplicate personnel. But, if the downturn is as sharp as the one in the late 1980s, it may not matter.

Douglas A. McIntyre is a partner at 24/7 Wall St.

MAJOR PAPERS:

• According to the Wall Street Journal (subscription required), NYSE Euronext Inc (NYSE: NYX) is investigating the trading of ABN Amro Holdings NV (NYSE: ABN) shares in March when it announced it may sell itself to Barclays plc (NYSE: BCS).
• Barron's (subscription required) "Inside Scoop" column reported that hedge fund ValueAct Capital Partners has boosted its stake in Advanced Medical Optics Inc (NYSE: EYE) to 12.6%, up from 9.9% disclosed at the beginning of June.
• The Financial Times reported that Citigroup Inc (NYSE: C) is not going to reduce its financing of buyouts in the near future, said Citigroup CEO Chuck Prince.
• Spanish telecom company Telefonica SA (NYSE: TEF) has made a EUR3B-plus offer to Portugal Telecom (NYSE: PT) for exclusive control of Vivo Participacoes (NYSE: VIV), reported the Financial Times.

OTHER PAPERS:

• Australian mining company BHP Billiton Limited (NYSE: BHP) has opened talks with private equity firms about a possible $40B takeover of aluminum company Alcoa Inc (NYSE: AA), reported the UK Times.

Stock futures pointed to a higher open ahead of data on the housing sector and consumer sentiment.

Yesterday's session was volatile, as expected during the week of a Federal Reserve policy meeting. U.S. stocks finished with modest losses after early triple-digit gains in the Dow Jones Industrial index. Early positive sentiment changed as concerns mounted following Bear Stearns (NYSE: BSC) two hedge funds backed by subprime mortgages that nearly collapsed.

Trading is expected to continue to be cautious today ahead of the Federal Reserve interest rate decision that will be reported on Thursday.
The Commerce Department is due to report May new home sales at 10:00 am this morning. Economists polled by Briefing.com expect a drop in to 925,000 from 981,000 last month.
At the same time, June consumer confidence index will be reported. The market predicts the index will slip to 106 from 108.0 in May.

Overseas, Asian stock markets were generally down today. European stocks are also down for a fourth day on speculation central banks will keep raising interest rates.

Corporate news:

BAE Systems Plc (LSE: BA-) shares are dropping over 10% as Europe's biggest weapons maker said the U.S. Justice Department started a probe of the company's compliance with anti-corruption laws in its operations in Saudi Arabia.

Companies scheduled to release quarterly results today include Kroger Co. (NYSE: KR) - expectations call for 48 cents per share on revenue of $20.34 billion. , Oracle Corp. (NASDAQ: ORCL) -- 35 cents per share expected, and Nike Inc. (NYSE: NKE) -- 85-86 cents per share.

The Dutch advocate general said ABN Amro Holding NV (NYSE: ABN) does not need shareholder approval to sell its U.S. arm LaSalle Bank to Bank of America (NYSE: BAC). This increases the chances that the bank will ultimately be bought by Barclays PLC (NYSE: BCS). The Dutch Supreme Court may or may not accept this.

MAJOR PAPERS:

• William Ackman's Pershing Square Capital Management, whose firms holds about 15% of Ceridian Corporation (NYSE: CEN), doesn't like the proposed $5.3B sale of the company to Thomas H. Lee Partners and Fidelity National Financial Inc (NYSE: FNF), and says he's going to find higher bidders, according to the Wall Street Journal.
• The Financial Times reported that British bank Barclays PLC (NYSE: BCS) has drawn up plans to sweeten its $86B all-share offer for Dutch bank ABN Amro Holdings (NYSE: ABN), by substituting cash for some of the shares it is currently offering for ABN.
• Beginning today, Apple Inc (NASDAQ: AAPL) is embedding its iTunes internet music download service in the British and Irish social networking site Bebo, reported the Financial Times.

OTHER PAPERS:

• The New York Post has learned that a private-equity firm owned by the Dubai government is close to buying Barneys New York from the Jones Apparel Group (NYSE: JNY).
• The New York Times reported that the Wall Street Journal is set to "shake up its newsroom" by reassigning and replacing several top editors.
• Golf equipment maker Callaway Golf Company (NYSE: ELY) is suing Fortune Brands Inc.'s (NYSE: FO) Acushnet Co, for allegedly violating five Callaway patents for golf clubs, reported the Los Angeles Times.

MAJOR PAPERS:

• Barron's Online's (subscription required) "Inside Scoop" section reported that VeraSun Energy Corp (NYSE: VSE) director Steven Kirby has bought almost $608k worth of stock on May 31, according to SEC data.
• Google Inc (NASDAQ: GOOG) and Salesforce.com Inc (NYSE: CRM) are joining together to go after small businesses, reported the Wall Street Journal (subscription required).
  
• The Wall Street Journal also reported that Amazon.com Inc (NASDAQ: AMZN) would increase its investment in China.
• The Financial Times (subscription required) reported that News Corporation (NYSE: NWS) CEO Rupert Murdoch met with representatives from the Bancroft family yesterday for five hours to discuss Murdoch's $5B takeover bid for Dow Jones and Company Inc (NYSE: DJ).
• Unions from more than a dozen countries have demanded that the banks bidding to take over ABN Amro Holdings (NYSE: ABN) hold talks with workers' representatives, reported the Financial Times.

WEBSITES:

• Engadget.com reported that, as of 6:33am, the Apple Inc (NASDAQ: AAPL) online store is down, indicating a new product to be released today.