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: PetSmart, Marsh & McLennan and Pinnacle Airlines were today's noteworthy upgrades:
Banc of America upgraded PetSmart (NASDAQ:PETM) to Buy from Neutral on valuation, as they believe the market is overly negative on the company's cyclicality.
Keefe Bruyette upgraded shares of Marsh & McLennan (NYSE:MMC) to Outperform from Market Perform on increased confidence management will be able to improve margins.
JP Morgan upgraded Pinnacle Airlines (NASDAQ:PNCL) to Overweight from Underweight citing the company's FCF and contract certainty.
OTHER UPGRADES:
Hasbro (NYSE:HAS) was upgraded to Buy from Hold at Needham.
Calyon raised Airtran Holdings (AAI) to Add from Neutral.
Liberty Entertainment (LMDIA) was raised at Merrill to Buy from Neutral.
InterActiveCorp (NASDAQ:IACI) and Liberty Media (NASDAQ:LINTA) have sued each other over IACI's planned breakup into five separate businesses. A Delaware Chancery Court Judge is expected to issue a ruling soon. IACI announced the plan to separate IACI into five publicly traded companies on November 5, 2007:
1) HSN, will include business comprising IACI's retailing segment; 2) Ticketmaster; 3) Interval International, which will include CondoDirect, Resort Quest Hawaii and VacationSource; 4) LendingTree, which will include RealEstate.com Domania, GetSmart, Home Loan Center and iNest; and 5) IAC media & advertising, Ask.com, Bloglines, City Search, Cursor Mania, Evite, Excite, insiderpages, iWon, My Fun cards, Black Web Enterprises Shoebuy.com, Match.com.
IACI April option implied volatility of 47 is above its 26-week average of 38 according to Track Data, suggesting larger risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Landmark reportedly is expecting to get $5 billion for the property though bidders tell the Times that $4 billion is a more realistic figure. I would venture that the company will get the higher figure because properties like this don't often come on the market.
Not only is the cable channel one of the most lucrative, its Web site is wildly popular as well. Unlike CNN, people don't just tune in when there is big news. Energy traders hang onto the channel's every word when they make bets on the hugely volatile commodities for oil, natural gas and electricity. People also rely on the company's forecasts to plan their lives. Moreover, The Weather Channel is in a good position to benefit from the public's growing interest in global warming.
According to people familiar with the matter, the Wall Street Journal reported that an investor group that includes Harbinger Capital Partners is expected to report a raised stake in The New York Times Company (NYSE: NYT). The raised stake is expected to be close to matching the 19% stake owned by the Sulzberger family.
The Goldman Sachs Group Inc (NYSE: GS) has been spared many of the problems of the subprime mortgage crisis, but other areas where it's involved, such as investment banking and leveraged loans, are hurting the firms profitability, the Wall Street Journal reported.
OTHER PAPERS:
Cablevision Systems Corporation (NYSE: CVC) is seeking to put a valuation on its Rainbow Media unit, in order to possibly sell it, sources say. In the past, the unit, which consists of several cable channels, has been valued at $3B, but the Dolan family is hoping to obtain a higher price, according to the New York Post. Possible buyers include Liberty Media Corporation (NASDAQ: LCAPA) and News Corporation (NYSE: NWS).
Elan Corporation (NYSE: ELN) is considering splitting its biopharmaceuticals arm, which markets Tysabri, from its drug technology division, the Sunday Times noted. The potential spin-off could unlock up to $1.5B to share holders.
MOST NOTEWORTHY: OptionXpress Holdings, Supertex and Syngenta were today's noteworthy initiations:
Merriman believes OptionXpress Holdings (NASDAQ: OXPS) has lost market share, and remains vulnerable on many fronts. They expect the competitive landscape will continue to intensify, pressuring margins and growth rates. The firm initiated shares with a Sell rating.
Morgan Keegan started Supertex (NASDAQ: SUPX) with a Market Perform rating, citing lack of near-term catalysts.
Syngenta (NYSE: SYT) was initiated with an Outperform rating at Bear, as they are positive on the company's defensive growth profile and valuation.
OTHER INITIATIONS:
HSBC initiated FedEx (NYSE: FDX) with a Neutral rating and $102 target and United Parcel Service (NYSE: UPS) with an Overweight rating and $86 target.
Credit Suisse started Liberty Media (NASDAQ: LCAPA) with an Outperform rating and $140 target.
After hitting a one-year high of $40.99 last February, the stock hit a one-year low of $23.30 last month. This morning, IACI opened at $26.08. So far today the stock has hit a low of $25.52 and a high of $26.44. As of 10:50, IACI is trading at $25.75, down $0.52 (-2.0%). The chart for IACI looks bearish but improving slightly, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
With regulators, politicians and rating firms biting at their heels, Countrywide Financial Corporation (NYSE: CFC) believed that it had no choice but to approach Bank of America Corporation (NYSE: BAC) last month about a merger, reported the Wall Street Journal. That fear led to BAC's $4B takeover of Countrywide, the Wall Street Journal reported.
According to the Financial Times, European public health specialists have found "significant resistance" to Roche Holding Ltd's (OTC: RHHBY) widely purchased influenza antiviral medicine Tamiflu.
OTHER PAPERS:
Shares of Britain's third-largest drug maker, Shire Plc (NASDAQ: SHPGY) plummeted yesterday to a two-year low on concerns about demand for its attention deficit hyperactivity disorder treatment for children, Vyvanse, the Telegraph reported.
IACI is recently up 20 cents to $24.60; shares near three-year low into company break up.
IACI is expected to report EPS on February 6.
IACI announced the plan to separate IACI into five publicly traded companies on November 5, 2007:
HSN, will include business comprising IACI's retailing segment.
Ticketmaster.
Interval International, which will include CondoDirect, Resort Quest Hawaii and VacationSource.
LendingTree, which will include RealEstate.com Domania, GetSmart, Home Loan Center and iNest, and
IAC media & advertising, Ask.com, Bloglines, City Search, Cursor Mania, Evite, Excite, insiderpages, iWon, My Fun cards, Black Web Enterprises Shoebuy.com, Match.com.
IACI February option implied volatility of 47 is above its 26-week average of 33 according to Track Data, suggesting larger risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Liberty Media Corporation (NASDAQ: LCAPA) filed a lawsuit in Delaware against IAC/InterActiveCorp's (NASDAQ: IACI) Barry Diller in an attempt to block Mr. Diller from completing the spinoffs of several units on terms that could dilute Liberty's voting power; the suit follows a suit filed by IAC against Liberty seeking to complete the divestiture on its own terms, the Wall Street Journal said.
OTHER PAPERS:
The Evening Standard learned that billionaire Wilbur Ross is in takeover talks with AMBAC Financial Group Inc (NYSE: ABK) and that a deal could come within the next two weeks.
WEB SITES:
According to analysts, TheDeal.com's Dealscape blog reported that the troubles at WellCare Health Plans Inc (NYSE: WCG) could lead to a sale of the company after the departure of the company's three executives.
Citing a source close to Advanced Micro Devices Inc (NYSE: AMD), CRN.com reported that rumors of a merger between the company and International Business Machines Corporation (NYSE: IBM) "is nothing but speculation." A rumor in Mergermarket, which caused AMD's share price to spike almost 11% on Wednesday, said IBM's microelectronics division could merge with AMD "possibly in the near term."
WuXi Pharmatech (NYSE: WX) was started with a Hold rating and $29 target at Jefferies on valuation. JP Morgan started shares with a Neutral rating and Credit Suisse initiated shares with an Outperform rating.
Myriad Genetics Inc (NASDAQ: MYGN) was started with a Hold rating and $50 target at Citigroup, as the firm is cautious on the Phase III Flurizan results and does not recommend putting new money here at these levels.
Citigroup also initiated shares of Cypress Biosciences Inc (NASDAQ: CYPB) with a Buy rating and $22 target as the firm believes Milnacipran has sufficient database for approval and is capable of gaining meaningful market share as firstline therapy.
Knology Inc (NASDAQ: KNOL) was initiated with a Buy rating and $25 target at BWS Financial, as the firm believes the company's growth potential is greater than other cable companies through a business plan that allows it to have operations in all regions of the U.S.
Investment bank Sifel Nicalous believes that IAC/Interactive (NASDAQ: IACI) may sell one of its largest units, Home Shopping Network to Liberty Interactive (NASDAQ: LINTA), a company controlled by John Malone. It would allow IACI to become an almost purely internet company.
Such a sale would transform the company. Retail operations which is mainly HSN accounted for $787 million of IACI's $1.595 billion in revenue last quarter. The balance was from online businesses including Lending Tree, Ask.com, and Match.com. While HSN was half of the company's revenue, its was only 43% of operating profit.
IACI's chairman Barry Diller would be gambling that a pure internet play would be valued more highly by the stock market than a hybrid firm with a large retail component.
While Diller may be right, he would end up with an only operation much smaller than properties like MSN and AOL, and that lack of scale could worry investors.
The Financial Times reported that Congress removed blocks on arms transfer requests by U.K. weapons manufacturer BAE Systems plc (OTC: BAESY), acting after BAE assured them that the transfer requests were unrelated to a defunct British investigation into bribery allegations involving Saudi Arabia and BAE.
According to Barron's Online's "Weekday Trader," Sony Corporation (NYSE: SNE) is climbing its way back to electronic prominence, but more work remains, and it may be time to take profits.
WEBSITES:
LiveMint.com reported that Citigroup Inc's (NYSE: C) emerging markets private-equity investment arm, Citigroup Venture Capital International, will reportedly invest $1.5B in India over the next three years, the largest investment by a single private-equity investor in the Indian markets.
Last night marked a once a every-few-years event: another Major League Baseball team got sold. Time Warner Inc. (NYSE: TWX) was finally given all approvals to close the sale of the Atlanta Braves to Liberty Media Corp. (NASDAQ: LINTA). The hold-up was the approval from Major League Baseball because of media changes and the potential changes that they take into consideration, but that is final.
Liberty Media exchanged approximately 68.5 million shares of Time Warner common stock for a newly created subsidiary that holds the Atlanta Braves, Time Inc.'s Leisure Arts, and $960 million in cash. Liberty has also retained approximately 103 million shares, or about 2.8% of Time Warner common stock.
This will also essentially complete Time Warner's $20 billion share buyback plan, taking care of two parts of its restructuring at once. This is a deal that had been in the works for some time, and that should put the restructuring at least well into the second half of the game. Batter up!
Jon Ogg is a partner at 24/7 Wall St.; he does not own securities in the companies he covers.
.gif){kind=logo}
MAJOR PAPERS:
InterActiveCorp
Whomever buys The Weather Channel will probably see nothing but blue skies.ss
.gif){kind=logo}
.gif){kind=logo}
.gif){kind=logo}
.gif){kind=logo}
Comfort Zone Investing: One thriving area of real estate: Apartments
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
