MAJOR PAPERS:

• The Wall Street Journal reported that is is not yet certain whether Merrill Lynch & Co Inc (NYSE: MER) will need to raise money. If it does, selling common stock could be expensive due to a 12-month protection the bank offered the investors that bought $12B in common and preferred shares earlier this year and selling assets like its interest in Bloomberg may present a different problem.
• The Wall Street Journal also reported that investigators from the European Union are probing deeper into the pharmaceutical industry in an effort to determine whether drug companies have used unfair tactics to increase prices and block competition. Investigators have reportedly ask for views on direct-to-pharmacy distribution channels, which Pfizer Inc (NYSE: PFE) and AstraZeneca Plc (NYSE: AZN) recently established in Britain.
• After Anheuser-Busch Companies Inc (NYSE: BUD) said it would reject InBev's $46B bid as "financially inadequate," InBev said it would launch a hostile bid. According to court documents, the Financial Times reported that InBev is preparing to launch a proxy battle seeking the removal of Anheuser's entire board.
• The Financial Times also reported that soaring energy prices are forcing U.S. consumer goods company The Procter & Gamble Company (NYSE: PG) to rethink how it distributes products. The company may consider shifting manufacturing sites closer to consumers in order to lower its transport bill.

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.

Although, 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 may 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 Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

I was convinced that Microsoft (NASDAQ: MSFT) would go hostile on Yahoo! (NASDAQ: YHOO). Microsoft is known as a tough player, right? And Yahoo seems to be a good strategic fit.

But of course, Microsoft's CEO, Steve Ballmer, has thrown in the towel on the $31 buyout offer. Apparently, he lobbed $33 per share – but the folks at Yahoo wanted $4 extra.

I can certainly understand why Ballmer doesn't want to overpay. After all, many M&A studies show that this is often deadly for dealmaking.

At the same time, Microsoft had the option of a proxy fight and a direct offer to Yahoo shareholders. However, Ballmer thought such things would be too distracting. But doesn't Microsoft have legions of attorneys and investment bankers?

It was the news as soon as I logged into my computer this morning from my West Coast office: Rupert Murdoch's News Corp. (NYSE: NWS) had made a whopping $5 billion bid for Dow Jones & Co. (NYSE: DJ). The bid was unsolicited and, it seems, entirely hostile to the Bancroft family, who controls Dow Jones and seems to be rejecting the generous offer.

It's a cute story, very Guys & Dolls. On one hand we have Dow Jones with its flagship brand, the Wall Street Journal. The paper is everything about wealth -- its very emblem the center of all the world's markets, Wall Street -- the editors are known for their conservative bent, the writers are known for their unparalleled and brainy research, even the design is known for its long-time avoidance of peripherals like color printing and photographs. On the other hand, we have Rupert Murdoch and his gang of vagabonds, from FOX broadcasting (need I really say more than "Next on FOX... Are You Smarter Than a Fifth Grader?") to the vast spoiled brat of recent acquisition MySpace. They're very other-side-of-the-tracks, the kind of news organization that would get a tattoo on its buttocks and then try to slip it in as the senior picture in the high school yearbook.

They're not a match made in heaven. They're a match made for Joe Millionaire, or Broadway. It's not real life; it wouldn't work. Whether or not the money is right, the styles are so vastly different, the respective organizations' reputations so opposite, any so-called "synergy" would be lost before the first page of the merger agreement was drafted.

US Airways Group Inc. (NYSE: LCC) is trying to pull out all the stops in its attempted hostile takeover of Delta Air Lines Inc. by lifting its offer by $1 Billion.

In order for the offer to get lifted, US Airways wants the official committee to request Delta to open itself up for due diligence by US Airways, to have a bankruptcy judge to postpone a hearing next week on Delta's restructuring plan and agree to support the start of a formal antitrust review.

The committee of Delta creditors will have until Thursday to decide if it wants to proceed with the US Airways offer. For now, I would be willing to bet that Delta is not going to go for this current offer and instead decide to follow the advice of its chief executive, Gerald Grinstein, who has repeatedly insisted the airline would be better off to emerge from bankruptcy-court protection on its own later this year

The main reason behind the raise in the current offer can be traced to a meeting between US Airways and some Delta creditors who aren't part of the official committee that advised the Airliner to increase its current bid by $2 billion. Will this be enough to sway some votes in US Airways favor? I doubt it, but we should get a better picture of the current takeover situation over the next few days.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.

The global consolidation in the steel industry continues apace. The latest mega deal is Tata Steel's $7.7 billion purchase of Corus Group (which is the former British Steel company).

The combined company will be ranked #5 worldwide in the steel business.

True, there is talk of other bidders coming to the table, such as SeverStal, Novolipetsk and CSN. However, based on the current valuation – and deal terms – a hostile bid would certainly be pricey and time-consuming. Corus is selling at roughly 6.6x EBITDA. Keep in mind that Mittal's deal for Arcelor was for a value of 4.8x EBITDA.

Success in the steel business is about huge scale – on a global basis. It helps these companies get contracts as well as realize economies of scale. Combine this with the growth in steel in emerging markets – such as China and India – these mega deals make a lot of sense.

What's more, this is an early sign of the rise of India's economic power on the global stage.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

Dell is not the only troubled PC maker. Gateway is also in a mess. Actually, it seems like Gateway really is another way of saying "troubled." This stock has been torture, which is at a lowly $1.50. The high for the past year was $3.25.

Well, Harbinger Capital Partners, a hedge fund, sees this as an opportunity to agitate for change (i.e., a better stock price). To this end, the firm scooped up 10.2% of Gateway's outstanding shares. Harbinger Capital Partners also hired a group that knows how to attack lackluster managements: Firebrand Partners (yes, the name says it all). Steve Galloway is the founder of the firm, who also built the ecommerce site Red Envelope and is also a Clinical Associate Professor at The Stern School of Business, where he teaches brand strategy to 2nd-year MBA students.

The Gateway deal is potentially lucrative for Galloway. That is, he gets a 10% cut of any profits on the adventure.

His first step? He sent a letter to Gateway's management.