This past week, Wrigley Co. (NYSE: WWY) filed a proxy statement for its $23 billion sale to Mars. And, if you go to page 18, you'll see an account of the transaction -- and how Goldman Sachs Group (NYSE: GS) was a key player.

Actually, it was back in 2006 that Goldman arranged a meeting between Wrigley and Mars. After signing confidentiality agreements, the parties talked about possible business arrangements (although, a buyout was not mentioned -- but, I'm sure, it was something everyone was thinking about, especially Goldman).

However, by August 2007, Mars and Goldman talked about possible strategic options. One suggestion: buy Wrigley. To this end, Goldman arranged a meeting with Berkshire Hathaway (NYSE: BRK.A) to explore financing possibilities.

By April 2008, Mars had made an overture to William Wrigley, Jr., to discuss a possible transaction. The result: Mars offered $75 per share.

Of course, the price was not enough. As a result, there were several more bids -- with the final one at $80 per share.

When it comes to M&A, JP Morgan's (NYSE: JPM) Jamie Dimon is a pro. But, when he agreed to purchase the distressed Bear Stearns Cos. (NYSE: BSC), he had to reinvent the playbook. After all, he had only a couple days to evaluate the transaction.

Well, there's an excellent piece on this in the Wall Street Journal [a paid publication]. Basically, Dimon realized that speed was critical -- as well as real-time communications. In a complex deal, things can implode easily.

For example, JP Morgan quickly setup fiber cables to connect its information technology (IT) system with that of Bear Stearns. This was critical to allow for the unloading of portfolio assets, which helped to reduce the overall risk of the deal.

In fact, JP Morgan has an army of advisers and employees that are combing through many documents and computer files. No doubt, there are thousands of reports trying to track the progress. And so far, it looks like things are running smoothly.

For the past year, Hewlett-Packard (NYSE: HPQ) posted revenues of $107 billion. So, to grow just 5%, the company will need to essentially create another Fortune 500 company.

That's something HP's CEO, Mark Hurd, definitely has mentioned on various occasions. Basically, how can a behemoth continue to grow?

Perhaps a smart strategy is to make big acquisitions?

Well, today HP has announced a hefty $13.9 billion buyout deal for EDS (NYSE: EDS), an information technology (IT) consulting operator. Over the past year, EDS posted about $22 billion in revenues.

But Hurd is not just concerned about the top-line. If anything, he's highly disciplined with generating profits. In fact, since he has come on board HP (back in 2005), Hurd has been masterful in finding efficiencies – while still pushing revenue growth.

While the history of transformative M&A is filled with failures, with the HP-Compaq combination a prime example of what can go wrong, the strategic rationale for the EDS deal makes sense. In today's global environment, customers want strong technologies but also sophisticated services. Actually, companies are increasingly outsourcing services to players like EDS.

Moreover, with much more heft, HP and EDS will become a formidable alternative to IBM (NYSE: IBM), which has proven the technology/services model.

Finally, I'm sure that Hurd will take out his cost-cutting knife. It's something that hasn't been emphasized but I'm sure it will be a big part of the deal.

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.

Just a few weeks ago, it looked like the $19.4 billion buyout of Clear Channel Communications (NYSE: CCU) was dead. But in the deal market, things can change quickly.

Just today, the New York Supreme Court said there will be a stay on the litigation on the deal. According to CNBC, it looks like the parties are engaged in heavy settlement talk.

No doubt, a trial could be problematic for the banks that are on the hook for $22 billion in debt financing. These banks include: Citigroup (NYSE: C), Credit Suisse (NYSE: CS), Morgan Stanley (NYSE: MS), Royal Bank of Scotland, Deutsche Bank AG and Wachovia (NYSE: WB).

Now, they may be willing to fund the deal.

Why? Well, it looks like the debt markets are improving and the major banks have worked hard to boost their balance sheets.

In other words, the US credit crunch may be thawing. If so, we may see some more dealmaking – which would be a relief for Wall Street banks eager to get some juicy fees.

So far in today's trading, Clear Channel's shares are up 9.5%.

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.

Since the onset of the credit crunch, it's been hard times for merger arbitrageurs. Simply put, there have been a variety of high-profile deals that have imploded.

And, of course, we have a new one: Microsoft Corporation (Nasdaq: MSFT)'s abandonment of its proposed $47.5 billion buyout of Yahoo! Inc. (Nasdaq: YHOO).

Yet, if you look at the stock price of Yahoo!, it looks like the arbitrageurs are still optimistic that a deal will happen. In fact, there is speculation that an activist fund will launch a proxy fight.

In January, Bank of America (NYSE: BAC) made a gutsy move when it decided to purchase Countrywide Financial (NYSE: CFC). True, it would greatly expand its mortgage footprint, but it would also mean taking on lots of risk.

Of course, since then, the financials went into a swoon. In fact, the US financial system almost imploded because of the Bear Stearns (NYSE: BSC) debacle.

As a result, there is much skepticism that Bank of America will close its deal, as evident by remarks from an analyst with Friedman, Billings, Ramsey & Co. – Paul Miller – who thinks that Bank of America should forgo the deal.

His belief is that there will be a need for a whopping $30 billion writedown, which would be tough to swallow for Bank of America's shareholders.

Interestingly enough, there are already signs that Bank of America is getting skittish. Last week, the firm was not clear that it would back Countrywide's debt. The upshot was that S&P downgraded the debt to junk status.

And yes, in today's trading, Countrywide's stock is down 10% to $5.35.

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.

Discretion is the better part of valor -- that's what I was always taught. Perhaps the time for a strategic withdrawal has come in the battle of Microsoft Corp. (NASDAQ: MSFT) vs Yahoo Inc. (NASDAQ: YHOO). Somehow, though, I can't imagine it will take that turn, as I read the analysts, strategists and pundits. How could it have become so adversarial? Surely something ugly may be at hand.

Did Steve Ballmer envision this type of scenario when launching his original bid for Yahoo? Did he ever imagine the attempted synergy would become a battle of wills as much as money? To what degree does pride factor into this pending recipe for disaster? I dare say that is what it has all come down to now. Pride goes before a fall, they say.

Does Steve Ballmer have the grace within him to fold his tents and quietly withdraw? Or shall his siege works be lain against the walls of Yahoo in an attempt to forcibly take it? Already he has warned that he will appeal to the sensibilities of Yahoo's investor rank and file. It's a tactic which has been used in many a war. However, attempting to romance the populace away from their leaders seldom, if ever, has worked. In the meantime, Microsoft's own shares are on the decline, diluting the strength of its acceptable offer.

I submit to you that at this time Microsoft should disengage from the situation entirely. Giving Yahoo some time to fully digest the reality of what it is facing might be a worthwhile strategy. To force the matter any further right now may only lead to the degradation of the reputations of both companies. That is something that no one desires.

The powerful silence emanating from an adversary which has quietly withdrawn places nothing but unanswerable questions on the horizon.

Gary Sattler is a freelance blogger. He does not knowingly have interest in the companies mentioned in this blog post.

Cephalon Inc. (NASDAQ: CEPH) shares are trading higher today on news that Takeda Pharmaceutical, a Japanese firm, has agreed to buy Cephalon competitor Millennium Pharmaceuticals (NASDAQ: MLNM) for $25 a share. MLNM is trading up almost 50% to $24.45 currently, indicating that investors think this deal will most likely happen. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CEPH.

After hitting a one-year high of $84.83 in June, the stock hit a one-year low of $56.20 in February. CEPH opened this morning at $64.94. So far today the stock has hit a low of $64.45 and a high of $66.18. As of 12:45, CEPH is trading at $65.27, up 1.05 (1.6%). The chart for CEPH is neutral and improving, while S&P gives the stock a bullish 4 Stars (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in just five weeks as long as CEPH is above $55 at May expiration. Cephalon would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.

CEPH hasn't been below $56 at all in the past year and has shown support around $59 recently. This trade could be risky if the company's earnings (due out on 5/1) disappoint, but even if that happens, that position could be protected by support the stock might find between $55 and $60, where it bottomed out in the past two months.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CEPH or MLNM.

As I fully expected, I've received a fair amount of comments on a recent blog post in which I proudly took a stance in favor of Exxon's court backed demand that the government of Hugo Chavez immediately ante up for the oil infrastructure which the country he leads has stolen from Exxon Mobil Corp. (NYSE: XOM). Most of the commentary was lucid and well thought out on both sides of the argument, but one particular commenter really piqued my sense of intrigue.

The comment I'm referring to was an assertion that what the Chavez government has done by seizing the Cerro-Negro oil development is legal. For the purpose of this rebuttal, and because I am near totally ignorant of international law, I'm going to assume that comment was correct. Now, here comes the Devil's Advocate:

Bill Miller, the investment guru at Legg Mason Capital Management, has published a letter to his shareholders. Keep in mind that his firm is the number two owner of Yahoo! Inc. (NASDAQ: YHOO) shares.

So what's his take on the $44 billion buyout offer from Microsoft Corp. (NASDAQ: MSFT)?

Well, it should be no surprise that Miller thinks the offer is under the fair value. In fact, he says that it appears that Microsoft "had been prepared to pay over $40 per share previously."

That would certainly be nice for Miller's shareholders. But, is it realistic to expect that Microsoft will bid against itself?

It's been a tough year for Wendy's (NYSE: WEN). The company has struggled to grow same-store sales, and then in June, the company garnered a mention on TheStreet.com's weekly list of the "Five Dumbest Things on Wall Street," for "announcing once a month that it's up for sale."

Now, with the stock touching a 52-week low on the year's last day of trading, Lehman Brothers analyst Jeffrey Bernstein is criticizing the company for failing to turn itself around in spite of an economic environment that should be conducive to the industry, and added that the company's earnings and sales targets may be too "aggressive." Bernstein also said that investors are frustrated with the lack of an outcome so far to the company's exploration of strategic alternatives.

Shares of Wendy's have fallen precipitously since the original announcement that the company was exploring a possible sale. Given that a cheaper share price should make the company a less expensive acquisition target, you would think that the offers would be rolling in.

Maybe the company is taking forever to mull its alternatives because there are just so many bids to choose from that it just can't pick one. However, my experience has been that a long period of silence after a big announcement that a company is up for sale is most often indicative of a lack of offers.

Tribune (NYSE: TRB) is recently down 55 cents to $29.95. TRB expects its $34-per-share sale to Sam Zell, private equity, debt holders and employees to be closed by end of 2007. The FCC granted temporary waivers to complete the deal on Dec. 30. TRB call option volume of 2,688 contracts compares to put volume of 15,775 contracts. TRB December option implied volatility of 80 is above its 26-week average of 36 according to Track Data, suggesting larger price risks.

LDK Solar (NYSE: LDK) is a manufacturer of multicrystalline solar wafers. Dow Jones reported LDK will tap $700 million in long-term debt and credit lines, as well as about $100 million in customer prepayments. LDK auditing report on the investigation of allegations of inaccurate inventory is expected in early December. LDK has said the company has correctly reported its inventories. LDK is expected to report Q3 EPS in mid-December. LDK December option implied volatility is at 165 and March is at 133; above its 21-week average of 98, according to Track Data, suggesting larger risk.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

CNBC is reporting that Schwab (NASDAQ: SCHW) and TD Ameritrade (NASDAQ: AMTD) may be in talks to buy troubled discount broker E*Trade (NASDAQ: ETFC). The news has pushed up E*Trade shares as much as 23% to $5.25.

The problem is that if the broker's mortgage securities investments are as severe a problem as some analysts think, the company may not be worth more than the $3.46 where the stock traded a few days ago. Those buying into the rally could be burned if an offer is well below the current price.

Any deal would probably be based on selling the customers of the discount brokerage unit and keeping the damaged securities on the balance sheet within the remaining public company. There is no guarantee that the cash paid for the customer base would not be eaten up if the market for these distressed securities drops further.

E*Trade may be worth over $5, but it could also be worth a lot less.

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

Despite all the rumors, the $24.7 billion buyout of Alltel (NYSE: AT) got done. With the credit crunch and botched deals, the stock definitely showed volatility. But, the private equity folks at Texas Pacific Group and Goldman Sachs (NYSE: GS) certainly didn't lose interest in the company. The stock price on the transaction was $71.50.

No doubt, Alltel made some key strategic moves to make itself attractive to private equity sponsors. Perhaps the most important initiative was the spin-off of its wireline business in 2006. Basically, this provided more focus for the company.

To get some more perspective on the deal, I checked out the proxy disclosures. Alltel took the approach of a quicker auction – so as to minimize leaks as well as try to get a better valuation.

Alltel had its financial advisors put together a summary LBO (leverage buyout) analysis. The estimates ranged from $59.75 to $70.50. This assumed that the company could fetch 6.5x to 8x multiples on EBITDA by 2012, which would produce a return ranging from 17.5% to 22.5% per year.

All in all, this looks like a textbook example of a quality deal. Yet, there are certainly risks. After all, Alltel will need to manage a debt load of $23 billion.

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 DealProfiles.com.

BEA Systems (NASDAQ: BEAS) was able to get Goldman Sachs (NYSE: GS) to suggest that the company is worth $21 a share. The stock has not traded that high in over four years. But Oracle (NASDAQ: ORCL) has made a bid of $17, and the BEAS board wants to see if it can get more.

The plan does not appear to be working out. Oracle said that it would not pay extra money for the smaller company and will simply take its case to shareholders.

Reuters writes that "Oracle said BEA's price represented an 80 percent premium to its shares before activist shareholders started pushing for a sale of the company, and nearly 11 times BEA's revenue from software maintenance services in the last 12 months." If the BEAS shareholders do not push its board to take the offer, Oracle has threatened to move on.

BEA Systems has a problem. The number it has picked for valuing the company is arbitrary. The company's stock price before the Oracle offer does not support it. Shares changed hands in the $13 to $14 range. And no other company has come along to even match Oracle's $17 offer.

The BEAS board may be dooming a buyout and that would probably send shares back to their pre-offer lows. That kind of behavior often brings shareholder lawsuits and trouble that the company's management does not need.

BEA Systems ought to wise up and take the money on the table.

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