SLM-Flowers fight turns nasty; investor opposes Cablevision plan; Tektronix-Danaher deal provides hope

By Evan Weinberger

New York, Oct. 15 - The feud between student loan giant SLM Corp. and the investor group led by J.C. Flowers & Co. took an even nastier turn Monday.

Meanwhile Cablevision Systems Corp.'s visions of privacy are facing opposition from shareholders and recommendations to oppose it from outside research firms.

BEA Systems Inc. rejected Oracle Corp.'s overture Friday, saying it was too low. The troubled software producer was also hoping that another firm would ride in with a better bid. At least one of the potential suitors declined that opportunity over the weekend.

But in that sea of rancor, a few deals provided some calm. One new transaction was announced Monday, as Tektronix Inc.'s board of directors agreed to a $38 per share buyout by Danaher Corp. The deal is worth a total $2.8 billion and represents a 34% premium on Beaverton, Ore.-based Tektronix's closing stock price Friday.

The directors recommended that shareholders vote for the deal, which is expected to close by the end of the fourth quarter of 2007.

While analysts' opinions were mixed over the ultimate fate of the XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. merger, investors in both companies seem to like the odds of it happening.

One opinion that is not mixed is that the stock markets had a very bad day Monday. Record oil prices and Citigroup's announcement that third quarter profits were down 57% combined to hogtie all three major indexes.

The Dow Jones Industrial Average recovered from its lows of the day, but still lost 108.28 points, or 0.77%, to close at 13,984.80.

The Nasdaq slouched even farther, closing at 2,780.05, a loss of 25.63 points, or 0.91%.

The Standard & Poor's 500 had a Momma Bear fall - right in the middle of the other two markets. The S&P dropped 13.09 points, or 0.84%, to close at 1,548.71.

Sallie Mae, Flowers going nuclear

In a case of what appears to be two sides going down an avoidable nasty path, the court filings keep piling up in the fight between Sallie Mae and J.C. Flowers.

On Friday, Reston, Va.-based SLM filed a motion for a Delaware judge to expedite against its claims against the consortium led by Flowers. The original lawsuit, which demanded Flowers either pay the $900 million breakup fee or the $60 per share that was previously agreed, was filed last Tuesday.

Flowers filed its counter to the SLM expedition request Monday, claiming that there was no need for the judge in the case to move any faster than normal.

At the center of the dispute is a disagreement over whether a new law tightening restrictions on student lending passed in September constitutes a material adverse effect that could allow Flowers and its partners to back out of the takeover. Sallie Mae says no. Flowers says yes.

The dispute has become personal, with SLM executives publicly taunting Flowers executives. "It may be good on the playground, but never in the boardroom," one market watcher said.

And so, it looks like the fight is ratcheting up to nuclear. "It's on its way," the market watcher said.

SLM stock (NYSE: SLM) slumped $2.54, or 5.24%, to a close of $45.91.

SAP not looking to BEA...yet

When San Jose, Calif.-based software producer BEA Systems rejected Oracle's $17 per share offer Friday, claiming it was too low, market watchers hoped other firms would jump into the bidding.

One of the firms mentioned was Walldorf, Germany-based SAP AG, a business software producer.

Those market watchers may have to hope for another firm to step up, as SAP chief executive officer Henning Kagermann told the Financial Times over the weekend that he was not interested in acquiring a company with as much overlap with SAP as BEA. Kagermann did not rule out other potential large-cap acquisitions.

But BEA should take heart, as Redwood City, Calif.-based software maker Oracle revised its bid for PeopleSoft five times in 18 months, a market watcher said. So despite protestations to the contrary, there is a chance that revisions could be forthcoming, the market watcher said. "The history of [Oracle chief executive officer Larry] Ellison's deal making provides some glimmering," he said.

Stock in troubled BEA (Nasdaq: BEAS) dropped 38 cents, or 2.02%, to $18.44.

Oracle stock (Nasdaq: ORCL) lost 37 cents, or 1.65%, for a $22.07 close.

Danaher-Tektronix deal good for the spirit

The deal between Danaher and Tektronix represents not just a big move for the two companies, but a step toward solidifying sentiment in the merger and acquisition market, one analyst said.

"It's a good thing that it's a deal that's in the billions," the analyst said.

The merger marks another in a recent sting of billion-dollar deals. The fact that it's an all-cash deal is simply icing on the cake, the analyst said.

Washington-based Danaher agreed to pay $2.8 billion, or $38 per share, of Tektronix.

Danaher is a medical, industrial and professional instruments manufacturer. Tektronix manufactures diagnostic equipment.

When the deal goes, through, Tektronix will become a part of Danaher's Electronic Test platform, along with Danaher's Fluke and Fluke Networks subsidiaries. According to a statement released by the two companies Monday, the addition of Tektronix's $1.1 billion in revenues will nearly double the platform's revenue.

"Through the application of the Danaher Business System we believe we can continue to deliver strong results in our established businesses and look at attractive adjacent markets for future growth opportunities," Danaher president and chief executive officer H. Lawrence Culp, Jr. said in the statement.

Tektronix's chairman of the board, president and chief executive officer Richard Wills added: "The combination of Danaher and Tektronix enables us to leverage each other's strengths and build on our commitment to long- term growth, innovation and continuous productivity improvement. We believe this is a compelling transaction for Tektronix shareholders and that the combined efforts of Danaher and Tektronix will extend the leadership position we have built in our served markets throughout the world."

Tektronix stock (NYSE: TEK) bucked the market Monday, skyrocketing $9.51, or 33.56%, to a close at $37.85 Monday. Danaher's laying out the cash, so its stock (NYSE: DHR) took a spill, losing 95 cents, or 1.15% to close at $81.52.

As part of the deal, the fundamental change clause in Tektronix's $345 million in 1.625% senior convertible notes due 2012 will kick in. Bondholders will be allowed to convert their notes into a cash amount based on the value of a certain number of common shares to be determined by a formula set forth in the indenture.

Major shareholder opposes Cablevision plan

The Dolan family, owners of Cablevision, would like to take their company private. They want to do this so bad, they are offering up $10.6 billion of their own money.

It's hard to tell whether the family thought it would receive much resistance, but resistance is what the family is receiving.

Longtime media investor Mario Gabelli and his Gamco Investors said in a Securities and Exchange Commission 13D filing that it would oppose the privatization. Gamco controls 8% of Cablevision stock. In the filing, Gamco said the "clients best interests are best served by staying the course in cablevision."

ISS Governance Services recommended that shareholders vote against the deal as well in a report Friday. Gabelli said he is leaning toward doing just that.

It is possible that shareholders may attempt to solicit other offers, one market watcher said.

Stock in Bethpage, N.Y.-based Cablevision slid 53 cents, or 1.54%, Monday to $33.90.

Hopes rise for XM, Sirius

Bear Stearns raised its 2008 earnings guidance for Washington-based XM Satellite Radio Friday to $16.50 from last year's $15 guidance on hopes that the merger with Sirius Satellite Radio will go through.

A Citigroup analyst, Eileen Furukawa, said there was a 60% chance the deal would go through, resulting in $7.2 billion in savings for the would-be new entity, last week

Of course, not every analyst is as bullish on the deal, or XM. Standard & Poor's has the stock rated as a "strong sell" and no better than a 50% chance the deal goes through, according to a report last Tuesday. S&P kept Sirius at a hold rating, citing its superior fundamentals

XM stock (NYSE: XMSR) added 32 cents, or 2.12%, to close at $15.44 as optimists apparently outweigh pessimists.

Stock in New York-based Sirius gained 9 cents, or 2.54%, to close at $3.63.

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