$10 for Bear stands; Yahoo! still pushing for better price; Clear Channel gets murky

By Aaron Hochman-Zimmerman

New York, March 25 - Equities just refused to give in on Tuesday and ended nearly unchanged after hitting an early sinkhole.

"Maybe there's a decent chance we put a bottom in last week," said Paul Martin of Martin Capital Advisors.

"Unfortunately or fortunately, as the case may be, the collapsed major company may be a kind of putting in a bottom ... maybe that's what it takes" he said about Bear Stearns Co.

"[Bear] was the company selected to be sacrificed," he added.

Bear's collapse also came at the same time as the Federal Reserve's opening of the discount window, he said.

Now "it's almost impossible," Martin said, to think of another bank, like Lehman Brothers Holdings Inc. failing the way Bear did, although "anything can happen," he added.

Bear's stock was off slightly, but still above $10.00, the level of Monday's new buyout offer from JPMorgan Chase & Co.

A rumor of a better offer from Bank of America Corp. for Countrywide Financial Corp. was heard around various water coolers, but was more likely Bear-inspired wishful thinking, according to one source.

Talk of better offers was also heard in connection with Yahoo! Inc. and its ongoing staring contest with Microsoft Corp.

Meanwhile, many were beginning to feel that the deal for Thomas H. Lee Partners and Bain Capital Partners to privatize Clear Channel Communications Inc. may have too much interference built into the agreement.

Also, Penn National Gaming Inc. shares were better after co-acquirer Fortress Investment Group LLC said it was committed to funding the deal.

Consol Energy Inc. withdrew its offer to buy the shares of CNX Gas Corp. it does not already own, but says it will continue the consolidation under more suitable market conditions.

The Dow Jones Industrial Average fought hard, but ended down by just 16.04, or 0.13%, at 12,532.60, while the Nasdaq Composite Index managed to add 14.30, or 0.61%, to finish at 2,341.05.

The S&P 500 also ended better by 3.11, or 0.23%, to close at 1,352.99.

The sacrificial Bear?

Shares of the highly watched Bear Stearns (NYSE: BSC) fell $0.31, or 2.76%, to close out at $10.94 as some speculated over whether the new $10 per share offer from JPMorgan (NYSE: JPM) was final or just the next step on the journey for Bear Stearns and the banking crisis.

In light of reports that the Federal Reserve was reluctant to support the five-fold increase by JPMorgan and considering the way the deal is structured, the Fed will not likely be enthusiastic about another bid, Martin said.

"I really don't see how anybody else can come in and do anything," he said.

"I wouldn't be surprised if somebody tried to make another bid," but "they're pretty much done at $10," he added.

Shares of JPMorgan lost $0.49, or 1.05%, to close at $46.06.

Countrywide lifts on rumors

Elsewhere in the financial world, Countrywide (NYSE: CFC) stock was better by $0.14, or 2.28%, to $6.28 as some rumors floated around regarding a better price from Bank of America (NYSE: BAC), a market source said with the appropriate amount of skepticism.

Bank of America shares slipped $1.48, or 3.49%, to end the session at $40.97.

The source called the rumors "silly," but still noted that the story had been circulated.

The rise in share price was more likely investors covering shorts as the deal draws nearer to a close, he said.

Will FCC rubber stamp DoJ?

In the communications sector, shares of XM Satellite Radio Holdings Inc. (Nasdaq: XMSR) dipped by $0.29, or 2.10%, to end at $13.50 after its deal with Sirius Satellite Radio Inc. (Nasdaq: SIRI) was approved by the Justice Department Monday afternoon. XM rose $1.85, or 15.49%, that day.

The next step for the deal is approval from the FCC which says it will review the deal for an unspecified number of "weeks," according to a market source.

Over the lifespan of the deal which began on Nov. 13, investors who have been following the deal have noted that there has been an encouraging amount of communication between the federal regulators involved.

As a result, the decisions from both agencies were expected to be similar.

"Since first announcing their intentions to merge, the public reaction to the merger of Sirius and XM has been staggering. Representatives from every possible stakeholder group in this debate have weighed in supporting the merger," the companies said in a joint press release.

Shares of Sirius also lost $0.06, or 1.90%, to finish the day at $3.09. Sirius shares had risen 25 cents, or 8.62%, on Monday.

Clear Channel breaking up?

Meanwhile, shares of Clear Channel Communications (NYSE: CCU) sank $1.89, or 5.49%, to $32.56 as many wondered if the $19 billion deal with Thomas H. Lee and Bain Capital was built to last.

Thomas H. Lee and Bain Capital as well as Citigroup and Morgan Stanley, have hit snags over the complicated arrangement of financing, the Wall Street Journal reported.

The lack of enthusiasm for the deal comes after a March 11 hearing in the House of Representatives subcommittee on telecommunications which Thomas H. Lee Partners' managing director Richard Bressler left smiling and confident that the deal would be completed.

The struggling deal has been mirrored by the stock's sinking price; "That's certainly how the stock is performing," Martin commented.

Yahoo! plays for more

Technologically speaking, shares of Yahoo! (Nasdaq: YHOO) added $1.21, or 4.40%, to close the session at $28.73 as some attention was taken off Bear Stearns and JPMorgan and put toward other deals. In Yahoo!'s case, investors found a Citigroup rating upgrade to buy from hold.

Microsoft (Nasdaq: MSFT) shares were off by just $0.03, or 0.10%, to $29.14 as it is expected by many to eventually end its siege of Yahoo! with a better offer of $34 per share, rather than the current $31 per share offer.

Also, considering its history with the company, the Justice Department is already familiar enough with Microsoft to speed through approval of a deal, a market source said.

"I think Yahoo! has been trying to play this thing for a higher number for a while from Microsoft," Martin said.

The deal is likely to wrap up "sometime in the next few weeks," he said, adding: "I think they had to string this thing along."

Consol Energy drops deal

Still in energy, shares of Consol Energy (NYSE: CNX) slid $0.31, or 3.93%, to finish at $32.02 as it announced the termination of its proposed exchange offer for the 18% of shares of CNX Gas Corp. (NYSE: CXG) which is does not already own.

Shares of CNX Gas jumped by $3.16, or 4.85%, to $68.26.

A press release offered two explanations for the termination: "First, price demands from

certain CNX Gas stockholders were considered to be unreasonable. Second, recent stock market volatility has made it difficult to accurately assess the ultimate cost of the transaction."

Consol still intends to buy a larger stake in CNX Gas when market conditions are more favorable, the release continued.

Penn deal to go ahead

Shares of Penn National Gaming Inc. (Nasdaq: PENN) added $2.74, or 6.49%, to close at $44.94 as Fortress Investment Group (NYSE: FIG) said it was committed to funding its acquisition of the company.

Penn National has an agreement to be acquired by Fortress and Centerbridge Partners, LP.

The $67 per share deal was approved by the West Virginia Lottery Commission on Thursday.

Shares of Fortress Investment were better by $0.53, or 4.81%, to end the day at $11.54.

The deal is expected to be completed in the second quarter of 2008.

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