Earlier today, the Street was abuzz with rumors that Kraft Foods (NYSE: KFT) was investigating the sale of brands such as Maxwell House and Oscar Mayer in order to raise capital to up its Cadbury (NYSE: CBY) bid to something a little bit sweeter (and one the confectionery giant might not reject).

Kraft responded to the rumors saying they were just that - unfounded conjecture - and noted that it would not in fact need to ditch hot dogs and coffee for creme eggs and Trident gum. A spokeswoman for the company told Reuters "The financing for this proposal does not require any divestitures." So where did these rumors get started, anyway? Is Kraft protesting too much?

As Jon Ogg reported, Allergan, Inc. (NYSE: AGN - option chain) rallied sharply on Tuesday amid rumors that GlaxoSmithKline (NYSE: GSK) was mulling a takeover bid. Speculative investors jumped all over the news, as option volume on AGN skyrocketed well beyond normal levels yesterday. Interestingly enough, it seems that some traders took advantage of the stock's surge to initiate new bearish positions.

Specifically, AGN on Tuesday saw 15,850 puts cross the tape, which represents about 14.5 times its average daily put trading volume. Meanwhile, 59,943 call contracts changed hands, marking 11.5 times the norm.

With news of the Merck/Schering-Plough merger, Roche (RHHBY) is nearing a deal with Genentech's (NYSE: DNA) board that would give Roche the remaining 44% of Genentech that it doesn't already own. Reports from the Wall Street Journal suggest that the two companies may have been close to a deal Monday afternoon, with timing and closing conditions yet to be agreed upon. In fact, the Journal noted that these terms could cause the deal to fall apart.

Roche is offering $95 per share for the remaining Genentech's shares, up from Friday's offer of $93 per share, which was already higher than the earlier offer of $86.50 per share. Reportedly, Genentech's board has pegged the company's worth at $112 per share. However, Roche's chairman noted that this price is not realistic, stating the firm's current offer is still fair.

The FTC won't give up its battle with Whole Foods (NYSE: WFMI) over the company's long-complete merger with Wild Oats Markets, but an agreement has been reached between Whole Foods and a small, local organic and natural foods' grocery, New Seasons Market. About six weeks ago in the New Seasons blog, popular CEO Brian Rohter highlighted an invasive subpoena received from Whole Foods' attorneys, claiming that his company's secrets are party to the FTC/Whole Foods dispute. The subpoena demanded a wide variety of documents, including all documents relating to competition with Whole Foods or Wild Oats; financial information, by store; market studies and strategic plans; and all plans for future stores, expansion and renovation. Local shoppers and business owners cried foul; the subpoena, many believed, was Whole Foods playing dirty pool.

Today, thanks to pressure from both the local and national community, Whole Foods came to an agreement with New Seasons whose terms weren't released, but in which the small Pacific Northwest chain will be required to release far less sensitive information. Rohter wrote that he was "pleased" with the outcome.

It could be that Whole Foods has far bigger fish to fry than whatever advantage it could have gained from New Seasons. The FTC recently asked a judge to order Whole Foods to bring back the Wild Oats signs, and to voluntarily halt whatever integration it still hasn't completed. What's more, rumors that the company is a takeover target could be distracting management as they (depending on these reports' truth) spin the rumor mill or wheel and deal with the potential acquirers. On the days' news, the stock was down 21 cents to $12.16, about four dollars higher than its five-year low, recorded just before Thanksgiving in November 2008.

After the initial rebuff of Swiss-based pharmaceutical giant Roche's offer to acquire the 44% of Genentech (NYSE: DNA) stock Roche does not currently own, DNA is coyly encouraging the completion of a deal at a higher price.

Genentech is among the leading biotech companies in the world. It is engaged in the discovery, development, manufacturing and commercialization of pharmaceutical products intended for treatment of previously untreatable illnesses.

In 1990, Roche acquired a 56% stake in the company. Since that time, the relationship between the two companies has been a model for similarly structured combinations.

Roche's offer of $89 per share for DNA was characterized by DNA as significantly undervaluing the company.

But this was hardly a "hit the road, Jack" response. DNA's board of directors has been encouraging the two sides to continue discussions, and recent comments suggest that the deal could come together soon.

With the FTC, argues Whole Foods Markets (NYSE: WFMI), it's personal. Ever since the federal agency began its review over the company's merger with Wild Oats Markets about a year and a half ago, Whole Foods says, the deck has been stacked against the organic and natural foods store chain. What's more, the FTC has continued to pursue Whole Foods to undo its deal even though the merger closed in August 2007, after the FTC lost its first challenge to the merger in federal court. Just last week, reports of an intrusive subpoena had many watchers crying foul over Whole Foods' behavior; this week, the FTC is getting its own harsh spotlight.

Whole Foods is appealing to Congress, and yesterday filed a lawsuit to stop the FTC from continuing its challenge to the long-completed merger. The FTC is running a rigged game, says CEO John Mackey, and what's more -- "we would be better off today if we hadn't done this deal" with Wild Oats. With the depressed economy (and, grocery analysts like myself would argue, Whole Foods' inability to develop a cohesive mission that resonated with sustainability-conscious shoppers), Whole Foods sales have been bottoming out, and the debt the company accrued to complete the merger is now weighing heavy on the balance sheet.

Indeed, this battle over a minority of the grocery market -- a minority the FTC inexplicably argues is called "premium and natural grocery" and is unfairly dominated by Whole Foods -- has gone on long enough.

Who knew that the fate of world beer would one day be in the hands of the beer faithful in Rochester, New York? The tastes of this blue-collar town, along with neighbors Syracuse and Buffalo, are key in the pending acquisition of Anheuser-Busch (NYSE: BUD) by Belgian giant InBev, SA. The three cities make up half of the U.S. consumption of Labatt Blue and Labatt Blue Light. Due to the popularity of Labatt brews and Budweiser brands in upstate New York, the U.S. Justice Department worries that beer prices might rise in Rochester.

So, if the acquisition is to be approved, giving Europeans control over America's iconic beer brands, InBev is being asked to sell the Labatt USA subsidiary. Other major InBev brands, including Stella Artois, Becks, and Bass, are not considered competitive enough in any markets to reduce competition between beers and provide upward pressure on prices.

Nope, it all comes down to Rochester and its surprisingly European tastes. Who would have thought?

Even top social networks such as MySpace and Facebook have a tough time monetizing traffic. So, just imagine how hard it is for the smaller players.

Perhaps one approach to deal with this issue is consolidation, right?

Well, this week Reunion.com and Wink have agreed to a merger. In fact, the companies plan to create a new brand (to be launched early next year) and focus on so-called "people search." The goal is to build a database with 700 million user profiles. How? There will be integration with the myriad of social networks across the globe.

There will be resources to execute on the business model as last year Reunion.com snagged $25 million in venture capital.

In fact, Reunion.com is profitable since the company charges for premium services, such as to view certain user profiles and since it has attracted an older demographic (because of the desire to reunite with former friends and classmates).

Despite all this, VCs are showing less enthusiasm for social networking deals. In other words, Reunion.com and Wink will likely need to be frugal in building out their new brand, which will certainly not be an easy task.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

You may file this under he can't be serious.

Looking in The New York Times business section, I notice that GM CEO Rick Wagoner skipped on over to Washington with his hat in his hand. It seems that Mr. Wagoner has discovered that the bailout legislation has been written in a manner that would allow him to get some money for his flailing company, General Motors Corp. (NYSE: GM). The funniness starts when you realize that Rick wants some money from the government (read that, us, the taxpayers) so he can finish totally wrecking his company by merging it with Chrysler. Really, the idea is almost too funny to laugh at. It makes me glad that my dad dumped his GM holdings when he did.

The Times' article states: "If G.M. or Chrysler were to go under, tens of thousands of people would be thrown out of work." That may be true in a fashion, but I have news for the Times and Mr. Rick Wagoner: if this merger happens, about 40% of those people now employed by the two companies will probably be out of work anyway. On the other hand, a merger of this sort would effectively pitch the UAW into the street, pretty much for good. Oh, I bet our friend Rick already thought about that.

If anyone who reads this has a chance to talk with GM's CEO Rick Wagoner before he pillages the public coffers to assure his income for a few more quarters, he/she might want to offer him this one little gem of wisdom:

An attractive, quality product, in keeping with the times, would really get your rear out of a jam, Rick.

Will a marriage occur between General Motors (NYSE: GM) and Chrysler? According to industry scuttlebutt, talks have been going on for several weeks, but have been held up partially because of the credit crunch. Today in the Wall Street Journal, a source familiar with the talks reported that talks were proceeding at a "measured pace" and that Cerberus, the private equity firm that owns Chrysler, would want to breathe "fresh air" into the management team of the combined company.

The only member of the two current management teams who could possibly be considered "fresh air" would be Robert Nardelli, much-maligned former CEO of Home Depot and now-chief of Chrysler. He's been in the spot for a little over a year, the sum total of his auto experience. The two most likely candidates to head the combined entity at GM, CEO Rick Wagoner and COO Fritz Henderson, have each been with GM for decades (Henderson was even born in Detroit) and can hardly be considered new blood.

Bringing an outsider into a merged company would certainly create change, though it's hard to know who Cerberus has in mind. The firm's own staff is filled with onetime Fortune 500 executives, including former Johnson & Johnson COO Jim Lenehan and former MCI president and COO Tim Price. My money's on Price, who worked actively on the GMAC deal and thus has deep experience with the industry. Who else could Cerberus be considering for this historic amalgamation of American autos?

Citigroup (NYSE: C) and Wells Fargo & Co. (NYSE: WFC) have reached a temporary cease-fire in the battle to acquire Wachovia Corporation (NYSE: WB). Late Monday, federal officials urged the dueling suitors to lay down their legal weapons and attempt a compromise in hopes of avoiding a protracted standoff in court. According to reports, new discussions between the banks and the Fed could lead to a division of Wachovia's assets between the two sparring suitors.

For those of you just joining this banking soap opera in progress: Citigroup agreed last Monday to acquire Wachovia's banking operations, with a little help from the Federal Deposit Insurance Corporation (FDIC). However, last Friday, Wells Fargo emerged with a financially superior bid to acquire Wachovia in its entirety, which eventually prompted Citigroup to file suit against its rival.

Today's news has sparked heavy volume on Wachovia's October 5 put option. This contract has seen 22,371 contracts cross the tape today on open interest of 57,273. This could indicate that many speculators are betting that the Wells Fargo bid won't go through -- at least, not in its entirety. That bid priced Wachovia at approximately $7 per share, compared to $1 per share under the terms of the Citigroup deal, according to Bloomberg.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.

In an enormous and startling turn of events, the Federal Deposit Insurance Corp. has taken over Washington Mutual (NYSE: WM), forcing it into an arranged marriage. According to reports in the Wall Street Journal, the FDIC reached out to the nation's biggest banks, asking them to make an offer. JPMorgan Chase (NYSE: JPM) was the one to step up to the plate, taking over the bank's deposits and branches. The value of the deal, and the fate of the bad assets, isn't currently known; but equityholders and senior debt holders will be wiped out.

Depositors leery of the bank's failure were part of the problem; $16.7 billion in deposits have been taken out of the bank since September 15. According to the WSJ, the FDIC fund won't be affected by the takeover.

The merger saga of XM Satellite Radio (NASDAQ: XMSR) and Sirius Satellite Radio (NASDAQ: SIRI) has gone on for so long that yesterday's FCC approval was almost a letdown. The companies have lost hundreds of millions of dollars over the year-and-and half since the marriage was first proposed.

The green light comes with some draconian conditions. According to The Wall Street Journal (subscription required), "As part of the deal, the companies have agreed to a three-year price cap as well as promising to bring interoperable radios to the market within a year." The price cap arrangement could hardly be worse for the new operation. Each company still bleeds red ink and has over $1 billion in debt.

The ability to raise prices to consumers could be the key to the survival of satellite radio. The industry's major source of subscribers is new car sales. Those may not recover for two years. The combined company will have close to $2.5 billion in debt, and may have to raise more money. In the current environment, that will be hard. Depending on how the capital comes in, current common shareholders could be diluted.

The news of the approval should be accompanied with some joy, but, it won't be. That may be why the shares in both companies trade so low.

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

MAJOR PAPERS:

• UBS AG (NYSE: UBS) won't comment on write-down estimates, but according to the Wall Street Journal, investors are expecting it as prices for mortgage securities have significantly gotten worse over the past several weeks as evidenced by Lehman Brothers Holdings Inc (NYSE: LEH) profit warnings.
• Yesterday Lehman's stock fell 8.7% as the firm announced a projected $2.8B second quarter loss and a $6B capital raise. Options activity indicated a lessening volatility, the Wall Street Journal reported, a sign that perhaps the worst may be over.
• According to a person familiar with the matter, the Financial Times reported that China's Qingdao Haier has approached investment banks to advise it on a bid for General Electric Company's (NYSE: GE) appliance business.

OTHER PAPERS:

• A brief filed by plaintiffs in a shareholder lawsuit against Yahoo! Inc (NASDAQ: YHOO) and its directors claimed that an employee severance plan put in place to protect workers after a merger with Microsoft Corporation (NASDAQ: MSFT) should be repealed immediately. The New York Times reported that the plaintiffs believe the plan could skew the outcome of a proxy battle between Yahoo! and Carl Icahn for control of the company.

MAJOR PAPERS:

• Merger talks between UAL Corporation's (NASDAQ: UAUA) United Airlines and US Airways Group Inc (NYSE: LCC) have been put off for now, the Wall Street Journal reported. United is reportedly close to an alliance with Continental Airlines Inc (NYSE: CAL).
• Harris Corporation (NYSE: HRS) is for sale and the company has begun to hear from interested parties, the Wall Street Journal also reported. Harris is looking for $75 to $80 per share. Speculation about the bidders includes General Dynamics Corporation (NYSE: GD) and Northrop Grumman Corporation (NYSE: NOC).

OTHER PAPERS:

• The Charleston Gazette reported that Chesapeake Energy Corporation (NYSE: CHK) has decided not to build its Eastern Division headquarters in Charleston, West Virginia in the wake of a West Virginia Supreme Court ruling on May 22.

WEB SITES:

• AppleInsider reported that Apple Inc (NASDAQ: AAPL) is expected to announce a back-to-school deal soon that will encourage students to buy new Macs by offering some of the largest incentives in the history of the company.