What is it Kirk Kerkorian (left) sees in the struggling auto sector? The crafty, 90-year-old investor earned a big chunk of his street cred in Las Vegas, wheeling and dealing in entertainment (he doubled-down on movie studio MGM), a hotel and an air service to the gambling haven. In the auto sector, he has taken big bets, lost some, and won some.

On Monday, Kerkorian signaled his intention to drive his interest in Ford Motor up to 5.6 percent, triggering a disclosure requirement. He began amassing Ford shares April 2. Tracinda holds 100 million Ford shares and announced on Monday that it planned a cash tender offer to acquire 20 million more, or about 1 percent of the stock, at $8.50 per share, or a 13.3 percent premium over Friday’s close. Ford lost $2.7 billion in 2007 and $12.6 billion in 2006. It has forecast a return to profitability in 2009 after slashing costs in the U.S. market by cutting jobs and closing plants.

Kerkorian sold off the remnants of his stake in GM in December 2006, netting about $1.68 billion - down from the $1.69 billion he had invested in the automaker. At the time Kerkorian sold off his stake in GM, the move was greeted by relief by investors since it removed the threat of a potentially distracting proxy fight for control of GM’s board.

A decade ago, when Daimler-Benz bought Chrysler for nearly $40 billion, Kerkorian tripled his investment in the U.S. carmaker, and still fought for a billion dollars he thought Daimler had short-changed Chrysler on. When the German automaker sold the money-losing U.S. unit last year, Kerkorian’s Tracinda Corp investment arm was in the front row of bidders, offering to buy all of DaimlerChrysler for $4.5 billion, just $500 million less than he netted in 1998, when the Daimler-Chrysler deal was inked.

The tender for 20 million Ford shares at 8.50 a share came at a great time for Ford - well, anytime would have been good - sending the stock up to year highs and beyond. The stock is up more than 60 percent since hitting a March 17 low of $4.95 a share. If the wheels stay on, perhaps this time he’ll hit the jackpot.

The common wisdom that the real money in air travel is in business class didn’t hold up for Eos. The airline of exclusively business class flights from New York to London said over the weekend it had filed for bankruptcy, becoming the latest failed approach to making the airline business profitable.

At the bargain-flight end of the spectrum as many as a half-dozen smaller airlines have collapsed under the weight of sky-rocketing fuel costs. ATA Airlines went chapter 11 earlier this month and holiday island hopper Aloha Airlines collapsed in March.

If Eos emerges from bankruptcy, perhaps it should consider a new slogan.

Warren Buffett (pictured), indulging his deal sweet tooth, is reportedly ready to help fund a buyout of chewing gum maker Wrigley by privately held M&M’s maker Mars for more than $22 billion. Both the New York Times and Wall Street Journal carry details of the deal this morning. The Journal suggests Buffett’s Berkshire Hathaway would provide financing to Mars and take a stake in Wrigley. A Mars-Wrigley combination would get the industry thinking about Hershey again. Candy giants Wrigley, Nestle and Cadbury have all taken licks, but the Hershey trust - under pressure from the town that Milton Hershey made - has not been able to get behind a deal.

Kirk Kerkorian’s Tracinda Corp plans to make a cash tender offer for up to 20 million shares of common stock of Ford Motor at a price of $8.50 per share, a 13.3 percent premium over Ford’s closing stock price of $7.50 on Friday. This would bring the autos investor’s holding of Ford to 120 million shares, or about 5.6 percent of the outstanding shares.

Continental Airlines has called off talks with United Airlines because of United’s weak financial condition and is in “advanced talks” with British Airways and American Airlines about a potential alliance, according to a source. Sources had told Reuters earlier this month that United was in serious merger talks with US Airways. Delta Air Lines and Northwest Airlines announced plans to merge nearly two weeks ago to become the world’s largest airline and counter skyrocketing fuel prices.

Panasonic maker Matsushita Electric and Sanyo are denying a report in the Yomiuri newspaper that they plan a tie-up of business and capital in what would be the first major reorganization move among Japan’s top electronics makers. Sanyo shares leapt 9.2 percent on the report, which suggested the two could merge in the future, with the main shareholders in struggling Sanyo looking to sell. Matsushita shares rose 1.2 percent, above a 0.9 percent rise in the benchmark Nikkei stock average.

Other deals of the day:

* German telecoms group Freenet has bought Debitel from private equity owner Permira for 1.63 billion euros ($2.54 billion) despite opposition from major shareholder United Internet.

* Dutch property group VastNed Retail said it was in exclusive talks with IEF Capital about its 1.15 billion euros ($1.79 billion) offer for the firm.

* French oil major Total said it had agreed to buy Canada’s Synenco Energy for around 480 million Canadian dollars ($471 million), in a deal that will strengthen Total’s heavy oil portfolio.

* Australian oil firm AED Oil said that the country’s Foreign Investment Review Board has approved the sale of a majority stake in its oil fields to China’s Sinopec Group, sending its shares up more than 11 percent.

* China Coal Energy, China’s second-largest coal producer, said it plans to pay 1.3 billion yuan ($185.5 million) to buy a coal mining company owned by a subsidiary of its parent.

* Blackstone Real Estate Partners, an affiliate of The Blackstone Group, said it would invest $18 million for a minority stake in a construction-management company in India.

* Ireland’s FBD Holdings said its board had rejected an approach from the Netherlands’ biggest insurer Eureko, partly owned by unlisted Rabobank.

* Italy’s leading insurer Assicurazioni Generali would be interested in two insurance units of UK bank RBS if they were up for sale, Chairman Antoine Bernheim said.

* German state bank LBBW has agreed to buy a unit of Cerberus Capital Management’s Austrian bank Bawag for 160 million euros ($249.5 million), an unidentified source in the finance industry told Reuters.

Things could get complicated soon in the saga of Microsoft's quest to acquire Yahoo, since the software makers deadline for what was origianlly seen as a friendly deal -- at the right price -- passed this weekend without Yahoo saying "I Do."

Now, that amicable offer could get downright hostile. Analysts say they believe Microsoft is planning to launch a hostile bid at its current price of $31 per share in cash and stock.

Three weeks ago, Microsoft said it will go hostile, or even call off its bid, if Yahoo did not agree to a deal before this past weekend. Now, Microsoft executives are poised to play their next card.

(Reuters)
(WSJ)

Keep an eye on:

• Teen Star Miley Cyrus apologozed for posing seminude in provacative photos. Disney Disney Channel backed up the rising star, saying -- "a situation was created to deliberately manipulate a 15-year-old in order to sell magazines." (Reuters )
• "The Takeaway", a rival pulics radio morning show, launchs, adding a little competition for the popular news show "Morning Edition." (WSJ)
• Grand Theft Auto IV' may drive up Electronic Arts' bid for Take-Two (Los Angeles Times) (Reuters)

(Photo: Reuters)

After a happy Wall Street wedding, comes the messy divorce. And as usual, it is all in court papers.

The private equity buyers have alleged that the banks that committed to finance their $20 billion buyout of Clear Channel tried threatening, stalling and even begging to stop the deal from going forward.

Thomas H. Lee Partners and Bain Capital Partners claim the banks, which include the likes of Citigroup and Morgan Stanley, asked the “purchasers with ‘hat in hand’ to change the terms of their commitment,” according to a court document.

Other alleged tactics: threatening to back out of another, unrelated loan to the purchasers; stalling to buy time to delay the transaction; and asking for unreasonable terms.

The credit markets worsened soon after the banks gave their final commitment letter in May last year to finance the deal, according to the document. The banks allegedly determined that the financing exposed them to potential losses that exceeded their fees.

The banks also include Credit Suisse Group, Royal Bank of Scotland, Deutsche Bank and Wachovia.

On Friday, a New York judge dismissed counterclaims by the banks against Clear Channel.

The private equity buyers sued the banks in New York and Texas, seeking to force them to fund the deal. Clear Channel joined them in the Texas suit, but was not a plaintiff in the New York case.

One wonders now: can they ever be friends again?

(Photo credit: Reuters)

The last thing most companies want is to associate themselves with is a psychopathic killer.

That goes double for nuclear power producers, so Entergy Corp’s “No Country for Old Men” themed analyst meeting on Friday came as quite a surprise.

The presentation of the company’s first-quarter earnings was built around references to the Oscar-winning movie, with the introduction and forward looking statements disclaimer read out in movie trailer fashion, and the slides strewn with quotes from the movie’s characters.

“It’s a movie about the choices that we make, the rules that we follow in life, the consequences of those choices and those rules and being accountable for the choices that we make for the rest of our lives,” said Chief Executive Wayne Leonard, on a webcast.

[Editor’s note: We thought it was about nihilism and the banality of evil.]

“When I came to Entergy in 1998, we’d made some bad choices, one of the questions was how long are we going to have to live and be accountable for the choices that were made in the past,” Leonard added.

It’s not like Entergy found a satchel filled with $2 million in drug money and was hunted down by a remorseless killer with a Prince Valiant haircut. But its foreign investments haven’t turned out so well. The company has since sold its assets overseas and has proposed a spin-off of its non-utility nuclear assets in a bid to capitalize on rising power prices.

The spin-off is facing more challenges due to the tight credit markets and opposition from New York’s Attorney General Andrew Cuomo. During the presentation, Entergy listed a range of options it might adopt in order to arrange the financing required for the spin-off.

Looks like the movie’s tagline rings true — “There Are No Clean Getaways.”

(Click here to view the presentation)

Photo: Richard Foreman, courtesy of Miramax Films

When Rupert Murdoch is poised to add another newspaper to his bulging portfolio of media properties, U.S. legislators voice their concern. In Italy, where prime minister-elect Silvio Berlusconi is poised to regain his hammer grip on the country’s airwaves, it’s time for V-Day.

The V in V-Day — sensitive readers who know Italian, shield your eyes — stands for “Vaffanculo,” which roughly translates to “F&$@ off.” The event was created by comedian/activist/blogger Beppe Grillo (left), aptly described by the New Yorker as “a distinctly Italian combination of Michael Moore and Stephen Colbert.”

In a rant before a crowd of 45,000 that lambasted politicians of all leanings, Grillo said on Friday that Berlusconi’s dominance of the media would be unthinkable in other countries. Critics say Berlusconi as prime minister — through his family-controlled Mediaset empire and through state television RAI — will at least indirectly control nearly 90 percent of Italy’s television audience.

“Imagine if (Barack) Obama as president was also the owner of Fox, of ABC and other TV networks,” he said. It was the second “V-day” for Grillo, who first launched the protest last September when he gathered petitions that sought to clean up politics.

He reiterated calls to bar convicts from entering public office, and read the names out loud of a handful convicted criminals who were elected to parliament. After each name, the crowd thundered back “Vaffanculo!”

(Reporting by Phil Stewart)

With Saturday’s deadline looming, Microsoft pressed its attack on Yahoo, saying the faded Web star needed to forgo “unrealistic expectations” that it is worth more than $44 billion. Microsoft said it would consider its alternatives including going hostile or withdrawing its offer if the two sides don’t make progress toward an agreement by this weekend. “Speed is of the essence for the deal to make sense,” Chief Financial Officer Chris Liddell told Reuters. “Unfortunately, the transaction has been anything but speedy and has been characterized by what would appear to be unrealistic expectations of value.” In the last few days, Chief Executive Steve Ballmer has reiterated Microsoft has no plans to raise its cash-and-stock offer, which the Yahoo board has spurned, saying it significantly undervalues the company.

How very un-buyout-firm-like. Fresh from two major financial services deals in recent weeks, private equity heavyweight TPG is actively targeting investment opportunities at banks and brokerages, people familiar with the matter said, and is happy to sit back with a non-controlling stake and let management do its thing. On Monday, senior officials of TPG, including co-founder David Bonderman, met with John Thain and Greg Fleming, the CEO and president of Merrill Lynch, to discuss investment proposals, these people said. Among the topics at the Merrill meeting was the possibility of a capital infusion into the bank, an offer Merrill rebuffed. But the meeting was one of a number TPG has held in recent months at financial institutions as it seeks to deploy some $20 billion in “dry powder,” or unused funds, sources said. TPG has more than $50 billion of assets under management.

Cell phone chip maker Micrel plans to issue a strongly worded letter later in its battle with an activist investor warning shareholders that a forced sale could damage its business. The letter, obtained by Reuters, says Micrel shareholders should vote against Obrem Capital Management’s rival slate. Obrem owns just under 15 percent of Micrel. It has urged the company to remove its current board of five directors and instead let shareholders vote on its proposed slate of six nominees at a special meeting on May 20.

Lara Croft game creator SCi Entertainment said it raised 60 million pounds ($119 million) as property tycoon Robert Tchenguiz and media group Warner Bros bought big chunks of a share placing. The new shares were priced at a 38 percent discount to Thursday’s closing middle market price, SCi said. Tchenguiz’s Thorson investment vehicle is expected to end up as the biggest shareholder with a roughly 22 percent stake, with Warner at 20 percent. Shares of SCi, which created the heroine of the Tomb Raider games, sank to a five-year-low after reporting in February it needed 50 million pounds to survive, after the cost of scrapping a series of ill-conceived computer games.

Ryanair shares have been hammered as fuel costs mount, but investors may be missing a trick, given hidden value in a growing fleet that could make it a tempting bid target for anybody who can raise the funds. Europe’s biggest low-cost carrier has seen its stock dive 60 percent in 12 months. Investors are wary of its lack of protection against record oil prices, but Ryanair has orders and options to buy dozens of Boeing planes over the next four years at prices so far below the going rate that the difference in value alone could net any buyer 2.3 billion to 2.6 billion euros ($3.6-$4.1 billion).

The Clear Channel Communications court hearing on Thursday brought no resolution to the battle over the $20 billion buyout of the radio station operator, but it did provide some heated words and enlightening emails.

Private equity firms Thomas H. Lee Partners and Bain Capital Partners sued the banks — Citigroup Inc, Morgan Stanley, Credit Suisse Group, Royal Bank of Scotland Group Plc, Deutsche Bank AG, and Wachovia Corp — to force them to fund the buyout of Clear Channel.

The private equity buyers contend the banks balked at providing financing after credit markets deteriorated last year. The buyout firms filed lawsuits in both New York and Texas, seeking to force the banks to fund the deal. The private equity firms rejected the banks’ offer on Tuesday to settle the dispute through binding arbitration.

Mark Hansen, a lawyer for the private equity firms, said the bankers “cooked up a set of loan documents that are nuclear, draconian and punitive” in an attempt to void the contract.

Projecting some emails onto a screen, Hansen highlighted a series of loan conditions that grew increasing onerous over time, including one that insisted the private equity firms could not use their own cash to repay the debt.

“Ah, there will be war.” one bank executive told another in an e-mail..

Hansen told the judge, “They want to lose the war. They want to lose the deal….They want the deal to blow-up.”

The Clear Channel battle promises to continue into May.

New York State Supreme Court Judge Helen Freedman did not indicate when she would rule on the banks’ request to dismiss the lawsuit. A May 5 trial date in the case may be delayed, the judge said.

“Don’t look too forward to May 5,” she said. “I might have to extend it a few days after.”

Stay tuned.

(Additional reporting by Leslie Gevirtz)

After a year of exploring strategic options and many rounds of back-and-forth rancor with billionaire investor Nelson Peltz, the resolution of the $2.4 billion deal came during one frenzied final week when the threat of a rival suitor became real, sources familiar with the situation said.

The No. 3 hamburger chain began exploring strategic options last April and formally began searching for a buyer in June instead of pursuing other restructuring options. The talks with Peltz, who owned 9.8 percent of Wendy’s, seemed dead last week after the fast-food chain rejected two of his proposals as too low.

What a difference a week makes. Wendy’s had started earnest talks with a private equity firm after Peltz said he would call a special meeting of Wendy’s shareholders, sources said. When Peltz heard that the rival bidder was close to a deal, Peltz returned to the bargaining table, sources said. The Wall Street Journal said the rival suitor was Kelso & Co. Kelso could not be immediately reached for comment.

“When Wendy’s issues its proxy materials regarding its desperate agreement to merge with Triarc announced this morning, the ‘Background of the Merger’ section ought to be a doozy, especially considering last week’s volley of letters that disclosed that Wendy’s had turned Triarc down as recently as last week,” Carol Levenson, director of research at Gimme Credit, said in a report.

The deal valued Wendy’s at $26.78, based on Triarc’s closing stock price on Wednesday. Based on cash flow, the deal puts a price tag of about 8- to 8.5-times adjusted 2007 EBITDA on Wendy’s, which is a valuation level reminiscent of the buyout peak.

Under terms of the deal, Wendy’s shareholders would control 80 percent of the combined company, with Triarc shareholders owning the remaining 20 percent. The deal has no break-up fee.

Still, despite gaining majority control and finally quieting an activist shareholder, Wendy’s failed to fetch the $37 per share to $41 per share Peltz was prepared to offer in July. In November, Triarc’s offer fell below that level.

“The announced agreement implies a mere 6% premium to Wendy’s closing stock price, and promised merger synergies are vague as to content and the timing of realization,” Levenson said. “Apart from increasing its scale and some potential cost savings, this appears to be a credit-harming outcome for Wendy’s.”

Last year, sources told Reuters that two banks declined to fund Peltz’s bid for Wendy’s as the credit-crunch made deal-financing difficult to secure. In the end, financing was a moot issue. Triarc used all stock.

(Photo: Nelson Peltz, 2006, Reuters)