Bailouts and shotgun weddings might be the order of the day for financial institutions, but among tech companies, hostile deals continue to win the popularity stakes. The fact that this year’s biggest hostile tech deals have failed to produce mergers — think Microsoft-Yahoo, Electronic Arts-Take Two, Cadence-Mentor – has done little to curb appetites for unsolicitied deals, which have hit record levels in the U.S.

Shareholder activism too has been on the rise, beginning with hedge fund Jana Partners’ agitation to pull CNET Networks out of its stupor — which eventually led to CBS snapping up the company best known for its tech news site. Smaller companies like Micrel and Asyst Technologies, too, have had to fend off dissident shareholders, although those stories got short shrift given the gargantuan activist-shareholder angle in Microsoft-Yahoo, courtesy Carl Icahn.

Then, there are two ongoing hostiles: Korean consumer electronics giant Samsung’s $5.8 billion unsolicited offer for flash memory maker SanDisk and Vishay Intertechnology’s $1.7 billion offer for International Rectifier. SanDisk has rejected Samsung’s offer as being too low.

Vishay, meanwhile, launched a tender offer for IRF yesterday, after the power semiconductor maker rejected Vishay’s sweetened $23-a-share bid. Friedman, Billings, Ramsay & Co analyst Craig Berger thinks the deal’s unlikely to get done.

“Both management teams have very disparate opinions about IR’s fair value,” Berger wrote in a note. Vishay seems reluctant to raise its offer again, and shareholders won’t tender their shares at $23, Berger concluded.

But if you think the spate of failed hostile deals might deter tech companies from taking that approach to M&A, think again. Tech stocks, which were smarting from the financial crisis, are even cheaper now and that, combined with the cash bounties that many tech firms have on their balance sheets, are creating new opportunities, one tech banker said.

“The stage is set,” the banker said.

What’s more, bankers said tech companies are shedding the traditional wisdom that hostile takeover attempts are no good because the assets — meaning the engineering talent — would walk out the door. And Oracle’s successful takeover of BEA Systems had a lot to do with that mindset change, they said.

Photo: Reuters file

Ask any business reporter covering the financial crisis what they were doing this weekend -- the answer is probably not "mowing the lawn" or "doing things that don't involve work."

The folks over at Fox Business Network is playing that to their advantage. A new ad, first reported by TVNewser (we think), points out that FBN was broadcasting live news this weekend while brand X, the much larger and older rival network CNBC, was mainly running taped broadcasting.

That said, CNBC was live on Sunday night with a two-hour special, but FBN is taking credit for running live coverage on Sunday morning, reporting that crucial progress had been made in Washington on the $700 billion bailout plan. At the time, spokeswoman Irena Briganti said, CNBC was airing a re-run of Suze Orman. Briganti said FBN also was running live for several hours on Saturday and Sunday while CNBC was not.

The bottom line, according to Fox? "We own this story." The bottom line, according to CNBC's Brian Steel? "Judging from our measured ratings alone, which does not include the most affluent homes and out of home viewing like trading floors and C-suites, we know Wall Street, Main Street and the investment community around the world are turning to CNBC and CNBC.com." In other words: "we think we have more viewers."

Here's the ad, which ran in today's New York Times, Wall Street Journal and on CNBC itself, at least within the New York City area on Time Warner's cable system.

(Photo courtesy of Fox Business News)

MAC clauses have long been controversial in deals. But in a ruling out of Delaware last night on the hotly disputed Huntsman transaction, they took on a life of their own.

“… material adverse effect clauses are strange animals, sui generis among their contract clause brethren,” an opinion from Judge Lamb stated. “It is by no means clear to this court that the form in which a material adverse effect clause is drafted (i.e., as a representation, or warranty, or a condition to closing), absent more specific evidence regarding the intention of the parties, should be dispositive on the allocation of the burden of proof.”

The clause allows a buyer to terminate a deal if a material adverse change, or effect, has occured. But lawyers have in the past argued that a high bar is set on MAC clauses by courts. The Huntsman opinion only reinforces that.

“Many commentators have noted that Delaware courts have never found a material adverse effect to have occurred in the context of a merger agreement. This is not a coincidence. The ubiquitous material adverse effect clause should be seen as providing a “backstop protecting the acquirer from the occurrence of unknown events that substantially threaten the overall earnings potential of the target in a durationally-significant manner. A short-term hiccup in earnings should not suffice; rather [an adverse change] should be material when viewed from the longer-term perspective of a reasonable acquirer.” This, of course, is not to say that evidence of a significant decline in earnings by the target corporation during the period after signing but prior to the time appointed for closing is irrelevant. Rather, it means that for such a decline to constitute a material adverse effect, poor earnings results must be expected to persist significantly into the future. ” 

The opinion from the judge found that the seller “has not suffered a material adverse effect, as defined in the merger agreement, and further concludes that the buyer has knowingly and intentionally breached numerous of its covenants under that contract”.

For the full opinion click here.

Everyone seems to agree the world needs better regulation to prevent a repeat of current turmoil.

But how exactly do you cap greed and stupidity, the driving forces behind today's property boom-and-bust and past examples of "irrational exuberance" like the dot.com bubble?

Craig Barrett, chairman of chipmaker Intel, was not optimistic when he dropped into Reuters offices in London.

"I don't know what regulation we'll get but the issue is that people just got over-heated and over-excited and it's really tough for the government to come in and slap you around and say it's illegal to get over-heated and excited," he said. 

"That's trying to regulate greed and stupidity, which are are two tough things to regulate."

A good meltdown never fails to bring out the bargain hunters. With congress celebrating the Jewish New Year, no deal on a bailout package can emerge before tomorrow at the earliest. And yesterday’s setback has sparked plenty of talk that agreement will be harder to achieve than thought over the weekend. Now uncertainty rules the markets and the rolloercoaster is gaining speed. What’s a bargain hunter to do? 
 
In London, shares of HBOS tanked more than 20 percent as talk swirled that Lloyds TSB would seek a lower price for its accepted takeover of the struggling British lender. Lloyds’ shares rose more than 3 percent. The longer it takes, and the more uncertainty that plagues the market, the better the case becomes for buyers of distressed rivals to renegotiate their deals. Buyers looking for better prices can easily point to changing circumstances to make their case.
 
Overnight, a Delaware chancery court judge ruled against private equity firm Apollo Management, which had been trying to walk away from a deal to buy Huntsman because, claiming Material Adverse Conditions had made its offer for the specialty chemicals group untenable. Maybe they should have, as the judge suggested, appeared more willing to deal. 

* Nippon Steel said it will boost its stake in affiliate Topy Industries to up to 20 percent as it aims to expand output of high-grade steel and push realignment in the fragmented construction steel industry. 

* Brokerage house Daiwa Securities and loss-making fund management firm Pacific Holdings said global market turmoil had kept them from completing a deal for Daiwa to buy into Pacific Holdings. 

* Greece called for expressions of interest from buyers for assets of Olympic Airlines and Pantheon, a holding company set up to replace Olympic.

* Private equity firms Bain Capital and Silver Lake have submitted formal offers for a stake in Huawei Technologies‘ mobile handset unit, sources involved with the matter said, as the auction moves forward despite the global market turmoil.

* The Kazakh unit of AIG said it had no intention of selling its insurance business in the Central Asian state.  Kazakhstan’s No.1 insurer Eurasia said it had made a formal offer to buy the Kazakh unit of the U.S. insurance company which was bailed out by the Federal Reserve this month.

Other than that, Mrs. Lincoln, did you enjoy the play?

Congress dropped a daisy cutter on the market yesterday, rejecting the $700 billion financial rescue plan and sending the stock market spiraling to its biggest one-day loss in history. But stock futures were up more than 2 percent in premarket trading.

Pundits overnight and market watchers today were laboring under the assumption that a package will ultimately reach President Bush’s desk. The process could move to the senate floor, where Treasury Secretary Henry Paulson’s plan has more support. But since House Republicans torpedoed the bill, it could face a tougher process.

In other news, Pfizer plans to drop efforts to develop medicines for heart disease, obesity and bone health as part of its plan to focus on cancer.

How exactly did the U.S. Treasury come up with the $700 billion price tag for its bailout package, recently known in the financial blogosphere as “the Splurge”?

“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com last week. “We just wanted to choose a really large number.”

Well, that’s reassuring.

UPDATE: It seems that HBO’s Bill Maher first coined the term “The Splurge,” as seen in this YouTube video. Thanks to Fred Wilson of Union Square Ventures, an early proponent of the phrase.

Lawmakers are gearing up to vote on a $700 billion financial bailout plan, but the rescue from Capitol Hill didn’t come soon enough for Wachovia — whose assets are being acquired by Citigroup — or for Fortis NV, Hypo Real Estate and Bradford & Bingley, which were nationalized by European governments on Monday.

“Wachovia did not fail; rather, it is to be acquired by Citigroup Inc on an open bank basis with assistance from the FDIC,” the agency said in a statement. Still in doubt is the status of brokerage AG Edwards and asset manager Evergreen, which are not included in the deal.

Wasn’t it only two weeks ago that Wachovia was in talks to merge with Morgan Stanley?

DEALS OF THE DAY

** Nokia Oyj is in advanced talks to sell its security appliances business to a financial investor, while it would halt its corporate software development, it said.

** Italy’s ENEL and Czech CEZ submitted bids to buy up to 76 percent of Albania’s power distributor while Austria’s EVN and Energie Steirmark withdrew, a government commission said.

** Iceland took control of its third largest bank, Glitnir as the global credit market turmoil claimed its latest victim following a string of financial collapses in the United States and Europe.

** Kazakhstan’s No.1 insurer Eurasia said it had made a formal offer to buy the local subsidiary of AIG, the insurer bailed out by the U.S. Federal Reserve earlier this month.

** Athletic shoe and clothing chain Foot Locker Inc said it plans to buy Delias Inc’s CCS business for $102 million, as it seeks to boost its appeal with teen-age skateboarders.

** Private equity firms Bain Capital LLC and Hellman & Friedman LLC were closer to a deal on Sunday night to buy Lehman Brothers Holdings Inc’s prized Neuberger Berman unit, two sources familiar with the situation said.

** A buyout of Japanese property firm Daito Trust Construction Co is unlikely to get done this year due to difficulty in raising funds for the deal estimated at $6 billion, financial industry sources said.

** Kazakh gold miner KasakhGold said it had received a possible cash and shares offer for 50.1 percent of the company from Russia’s top gold producer Polyus Gold.

** German lender Hypo Real Estate struck a last-minute deal with a consortium of banks for credit to resolve a refinancing squeeze that it faced, the group said.

** Singapore’s Neptune Orient Lines said it has submitted a binding bid to acquire the Hapag-Lloyd container shipping business but declined to provide details of its bid.

** Kookmin Bank cut the value of its planned sale of shares in Bank Internasional Indonesia to reflect a revision to Maybank’s bid for the Indonesian lender.

** Australian steel company OneSteel Ltd said it would make a NZ$175 million ($120 million) offer for its partly owned New Zealand subsidiary, Steel and Tube Holdings Ltd.

Since socialism is always more palatable when it bails out rich people, Henry Paulson’s $700 billion financial rescue package arrives in Congress today after round-the-clock negotiations over the weekend and exhortations from presidential candidates. But even as Congress prepared to vote, across the ocean the financial crisis rattled several European institutions.

The governments of Belgium, the Netherlands and Luxembourg moved to partially nationalize Fortis with an injection of over $16 billion. Also German lender Hypo Real Estate secured a credit line from the German government and banks up to 35 billion euros. And Britain nationalized mortgage lender Bradford & Bingley. Meanwhile shares in French bank Dexia fell on reports that it may need emergency capital. Rescue deals also emerged in Iceland, Russia and Denmark.

Citigroup will buy Wachovia Corp’s banking business, further consolidating power among three megabanks: Citigroup, JPMorgan and Bank of America.

The stock market was poised to open lower, on fears that the bailout plan would not be enough to rescue the economy. Treasuries and the dollar were up, but pared their gains after the Citigroup announcement.

- Derek Caney

    The wooing of Merrill Lynch advisers has gone viral.  Merrill’s team, the 16,000 strong “Thundering Herd” has, for the past two weeks, been in the midst of an anxiety filled waiting game regarding retention packages from Bank of America. Many are desperate to find out whether they’ll retain a sense of independence in the new configuration and just how the shotgun marriage will work in practice. Some recruiting firms are using unusual forums to profit from their misery.
Earlier this week, national recruiter RJ & Makay posted a video message specifically to Merrill advisers on YouTube, full of ego stroking, appeals to the firm’s storied history and no small amount of fear mongering.

The five minute video blast uses an all instrumental soundtrack which for the first 90 seconds sounds like a poor man’s Radiohead.
Naturally, the video suggests RJ & Makay is a possible and likely answer. If the difference in corporate culture, operating systems and department boundaries prove to be too burdensome, then the possible mass exit of the herd might go from possible to probable.
Merrill brokers hoping for a little escapism on the Internets look to be out of luck.

By Bob Margolis