King Pharmaceuticals Inc’s $1.4 billion offer to buy Alpharma Inc follows a wave of unsolicited bids in the otherwise weak merger market.

So far this year, there have been 50 unsolicited bids, totalling $137.3 billion worldwide, up from 19 deals totaling $30.2 billion for the same period a year ago, according to Thomson Reuters data.

The amount of unsolicited or hostile takeover bids has increased as weak stock prices have enticed large corporations that have the luxury of cash on their books or the ability to raise funding despite tight credit markets.

Other unsolicited offers this year included InBev NV’s successful battle for Budweiser brewer Anheuser-Busch Cos Inc, and Microsoft Corp’s abandoned effort to buy Yahoo Inc.

King warned it would make a hostile bid if Alpharma refused to accept its bid. King wants to expand its pain drug business through the acquisition of Alpharma, which makes the pain drug Kadian and pain patch Flector, as well as plus products to treat animals.

So far this year, there have been 9 hostile bids valued at $12 billion, compared with 6 bids valued at $102.2 billion at this point last year, according to Thomson Reuters.

It looks like King may have a battle ahead of itself as Alpharma said the offer was not in the best interest of its shareholders. The proposal was essentitally identical to two previous offers by King that Alpharma already rebuffed, Alpharma said.

Alpharma, however, said it would be open to discussions for a deal at a higher price. Analysts said Alpharma’s hint that it would consider more money puts the company in play for other suitors to emerge and potentially creates a costly bidding war for King.

As the dog days of August drag on, the M&A market seems content to spend the rest of the summer quietly at the beach. But, unlike last year, the deals that are being forged have been more likely to close.

The volume of deals that have been withdrawn has dropped 40 percent this year, according to research firm Dealogic. Withdrawn M&A totaled $428.6 billion so far this year, down from $716.2 billion in the same period last year.

The U.S. has the worst track record, leading all nations for the highest volume of withdrawn deals, Dealogic said. Withdrawn deals totaled $119.0 billion in the U.S., followed by Spain with $60.8 billion and Sweden with $47.9 billion.

Electronic Arts Inc's move to abandon its $1.9 billion hostile bid for Take-Two Interactive Software ranked as the 8th largest withdrawn bid in the U.S. this year, Dealogic said. Still, that deal could be salvaged as the two companies hold private negotiations.

The biggest deal failures in the U.S. this year? Microsoft Corp's $47.5 billion offer for Yahoo Inc ranked as the largest withdrawn bid, followed by a consortium's $12.8 billion yanked proposal for the Pennsylvania Turnpike, and the $8.5 billion collapse of Penn National Gaming's takeover, Dealogic said.

Of course, there are fewer deals overall -- so the decline in collapsed deals isn't much to cheer about. In the first half of the year, deal volume dropped 29 percent in the U.S. and 40 percent globally, according to Thomson Reuters data.

As the dog days of August drag on, the M&A market seems content to spend the rest of the summer quietly at the beach. But, unlike last year, the deals that are being forged have been more likely to close.

The volume of deals that have been withdrawn has dropped 40 percent this year, according to research firm Dealogic. Withdrawn M&A totaled $428.6 billion so far this year, down from $716.2 billion in the same period last year.

The U.S. has the worst track record, leading all nations for the highest volume of withdrawn deals, Dealogic said. Withdrawn deals totaled $119.0 billion in the U.S., followed by Spain with $60.8 billion and Sweden with $47.9 billion.

Electronic Arts Inc’s move to abandon its $1.9 billion hostile bid for Take-Two Interactive Software ranked as the 8th largest withdrawn bid in the U.S. this year, Dealogic said. Still, that deal could be salvaged as the two companies hold private negotiations.

The biggest deal failures in the U.S. this year? Microsoft Corp’s $47.5 billion offer for Yahoo Inc ranked as the largest withdrawn bid, followed by a consortium’s $12.8 billion yanked proposal for the Pennsylvania Turnpike, and the $8.5 billion collapse of Penn National Gaming’s takeover, Dealogic said.

Of course, there are fewer deals overall — so the decline in collapsed deals isn’t much to cheer about. In the first half of the year, deal volume dropped 29 percent in the U.S. and 40 percent globally, according to Thomson Reuters data.

Hedge fund Harbinger Capital Partners may be trying to raise its stake in Cleveland Cliffs Inc, but the iron-ore company has some protection in its home state of Ohio.

Cleveland Cliffs lacks many of the typical corporate takeover defenses, such as a poison pill or a staggered board of directors.

But since it is incorporated in the Buckeye State, Cleveland Cliffs has protection under a state statute that prohibits a party from acquiring more than 20 percent of a local company unless the transaction is approved by shareholders, according to research firm FactSet SharkRepellent. Tweny six other states have similiar statutes, the research firm said.

Harbinger, which owns about 15.6 percent of Cleveland Cliffs, said in a filing with the U.S. Securities and Exchange Commission that it is seeking shareholder approval to acquire a larger stake in the company.

Harbinger opposes the iron-ore company’s proposed takeover of Alpha Natural Resources. Harbinger contends that the $8.1 billion Alpha deal is not in the best interest of shareholders.

And who knows–Ohio may have more to help Cleveland Cliffs than just the 20 percent law. The state’s motto is “With God All Things Are Possible,” so any hedge funds that mess with Cleveland Cliffs may have to answer to a higher power. And the state rock song is “Hang on Sloopy,” which may inspire Cleveland Cliffs to hang on as its battles the hedge fund.

(PHOTO: Cleveland Cliffs’ corporate website)

Biotechnology company ImClone Systems Inc finally hired its defense team, bringing in JP Morgan Chase & Co to help it weigh an unsolicited takeover offer from Bristol-Myers Squibb Co, as well as a possible plan to separate into two companies.

ImClone called Bristol’s offer, which values ImClone at $5.2 billion, too low, but said it would review the proposal. Activist investor Carl Icahn, chairman of ImClone and a large shareholder of the company, has slammed the bid, saying it “greatly undervalues the company.”

Also up for debate is ImClone antibody IMC-11F8, which is now under development. If approved for sale, ImClone has said the antibody “might have a significant competitive effect on Erbitux,” and Bristol may have no rights to market that product. Bristol previously termed its offer for ImClone “full and fair” and said it believed it has rights to the follow-on drug to Erbitux, an ImClone cancer drug.

Bringing antibodies into a takeover battle is a new twist.

ImClone’s defense team of JP Morgan will battle Bristol’s team of heavyweights, which include Citigroup, Morgan Stanley and Credit Suisse.

Biotechnology company Genentech Inc on Wednesday followed ImClone Systems Inc’s playbook by rejecting a takeover bid by its largest shareholder.

Genentech rejected an offer by Roche Holding AG to acquire the shares of the Genentech it did not already own, saying the the $89 per share offer undervalued the company. Roche said it believed its offer for Genentech was fair and generous.

The move mirrored ImClone’s comments earlier this month, when it called a bid by Bristol-Myers Squibb Co too low. Bristol offered to acquire the 83 percent of ImClone it doesn’t already own for $60 a share, and said it believed the proposal was “full and fair.”

Eric Schmidt, an analyst at Cowen and Co, viewed Genentech’s response a classic game of chess, saying “This is no surprise at all. People believe the company is worth more and that Roche can afford to pay more. The game of chess has begun.”

Arbitrageurs, who specialize in trading takeover stocks, said they viewed both deals as inevitable but some haggling over the price was to be expected.

“In both cases, you have the obvious buyer and partner. It’s just a matter of price,” said one arbitrageur who declined to be named.

During the buyout boom of 2006 and early 2007, private equity firms could tap a vast pool of credit to cheaply fund mega-takeovers of $20 billion or more, outbidding corporate suitors that had to justify any deals to shareholders. Now, the tables have turned, according to Blackstone President and Chief Operating Officer Tony James.

As the credit crunch has made it difficult and costly to get funding, private equity firms have lost their ability to finance larger LBOs. The biggest deals that can be realistically financed are about $5 billion, with most deals hovering in the $1 billion range, James said.

Corporate buyers, though, are using cash on their balance sheets to take advantage of slumping stock prices and make acquisitions without the fear of being outbid by private equity firms, James said.

“We’re seeing more competition from strategics than we did in 2006,” James said. “A lot of them view that there’s a pretty benign antitrust environment, and their targets’ stock price is down.”

Corporate deal-making in the U.S. totaled $402 billion in the second quarter, up from $136 billion in the first quarter, Thomson Reuters said. Meanwhile, deals by financial sponsors trailed significantly, totaling $27 billion in the second quarter, and $22 billion in the first quarter.

Blackstone said it committed $2.4 billion of new equity in private equity from April through July. Meanwhile, corporate private equity revenue – including management fees and performance fees – totaled just $92.4 million in the second quarter, down from $400.5 million a year ago. Still, Blackstone’s assets under management increased to $25.08 billion, up from $23.48 billion a year ago.

Chemical maker Huntsman Corp’s second-quarter earnings have triggered a new round of sparring with its disgruntled suitor, Hexion Specialty Chemicals.

Hexion, a unit of Apollo Management, jumped on Huntsman’ssecond quarterresults, saying they showed that a material adverse change had occurred in Huntsman’s financial condition. Hexion has claimed the $6.5 billion purchase of chemicals maker Huntsman is no longer feasible and the combined company would be insolvent. The two companies have already filed lawsuits against each other.

Hexion said Huntsman’s EBITDA (earnings before interest, taxes, depreciation and amortization) had dropped 19 percent from prior year and its net debt — adjusted for asset sales — was more than 25 percent higher than a year ago.

“These results further demonstrate that Huntsman has suffered a material adverse effect which is the primary reason why the combined company would be insolvent if the transaction were to be completed based on the agreed capital structure,” Hexion said. “Huntsman has provided no information to support its assertion that the combined company would be solvent.”

For its part, Huntsman remained upbeat and said it had been “encouraged by the recent moderation in crude oil and natural gas prices” and it expected adjusted EBITDA in the second half of the year to be stronger than both the first half of this year and the second half of 2007.

Huntsman Chief Executive Peter Huntsman said he hopes litigation with Hexion will be resolved by mid-September, after an expedited hearing. The trial is scheduled to begin on September 8.

Stay tuned.

Drumroll, please: Almost two years after radio station and billboard company Clear Channel Communications began exploring strategic options, its $17.9 billion takeover finally closed on Wednesday.

The deal, slowed by legal battles in two states and negotiations to lower the purchase price, became a symbol of the buyout industry’s glory days and the subsequent struggles of the credit crunch.

Clear Channel had agreed to be acquired by private equity firms Thomas H. Lee Partners and Bain Capital Partners last year. The market quickly changed and credit to fund the acquisition became more costly and difficult to secure.

The buyout firms had agreed to buy Clear Channel for $39.20 per share, but were forced to file lawsuits in New York and Texas to ensure that a syndicate of six banks would still fund the deal. In May, the bank syndicate, the private equity buyers and Clear Channel struck a deal to lower the price to $36 per share.

And now Clear Channel’s stock will cease trading at the end of the day. Phew!

Sirius Satellite Radio and XM Satellite Radio also closed their merger this week after struggling for 526 days, or 17 months, to gain regulatory approval. The new Sirius XM Radio, with more than 18.5 million subscribers, is now the second-largest radio broadcaster after Clear Channel.

The next marathon wait? Shareholders of BCE Inc, the Canadian telecommunications company, must wait until Dec. 11 for the long-awaited $34.1 billion deal to close. Of course, that’s more than five months from now — who knows what could happen?

Republic Services Inc’s move to adopt a poison pill to ward off unwanted suitor Waste Management Inc typifies the recent jump in such defensive tactics by companies under attack.

Republic, the third-largest U.S. trash hauler, adopted a poison pill, or shareholder rights plan, on Monday to thwart “disruptive and coercive” acquisition tactics. Republic had agreed to acquire Allied Waste Industries for $6 billion, but now faces an unsolicited $6.2 billion bid from Waste Management.

Republic’s shareholder rights plan has a 10 percent trigger, or 20 percent in the case of investors who already own 10 percent of the company’s stock. Republic carved out an exception for Cascade Investment LLC, Microsoft Chief Executive Bill Gates’ investment vehicle, and the Bill & Melinda Gates Foundation Trust. Cascade and the Trust already own 15 percent of Republic stock and have permission to acquire up to 20 percent of Republic.

In recent years, the adoption of poison pills has been on the decline as shareholder activists have pushed for more open corporate governance practices at public companies. Only 85 poision pills were adopted in 2007, down from 298 in 2001, according to research firm FactSet SharkRepellent. So far this year, there have been 54 poison pills adopted.

Yet, when you look at companies that are under attack, the use of poison pills has surged, FactSet SharkRepellent said.

Of the 31 first-time users of a poison pill this year, 12 companies, or 39 percent, have been “in play” or under attack, like Republic. In 2007, the rate of “in play” poison pill adoptions was 24 percent, up from 20 percent in 2006. In 2001, the rate was less than 3 percent, FactSet SharkRepellent said.

Even with the new poison pill, Republic remains vulnerable to an unwanted deal, since it has an annually elected board of directors and shareholders can take action through written consent.

The company has a “Bullet Proof Rating” of 4.25, on a scale of 0-10, with 10 being the strongest defenses, according to research firm FactSet SharkRepellent. The mean Bullet Proof Rating for the Standard & Poors 500 Index is 3.67.

Waste Management said on Tuesday it hoped to buy Republic through a friendly, negotiated deal, but it did not rule out a hostile move. Waste Management said it was too early to speculate, but “we certainly hope that the path it will take is one where we can cooperate.”