Ambac, MBIA still waiting; Yahoo! set for layoffs; Quebecor in court; Fifth Third still after First Charter

By Aaron Hochman-Zimmerman

New York, Jan. 23 - While market sectors of all stripes were forced to wait longer for news of funding to bail out Ambac Financial Group, Inc. and MBIA, Inc., it was the prospect of an acquisition by Yahoo! Inc. which turned heads in the market.

Quebecor World Inc. went before bankruptcy court seeking approval for a $1 billion financing package to fund its operations while in Chapter 11.

As some companies were struggling to swim, investors smelled opportunity in the water and began buying again on Wednesday. The late-day rally sliced through the volatility and pushed the Dow Jones Industrial Average up to 12,270.17, higher by 298.98 or 2.5%.

The Nasdaq and the S&P 500 also shuddered back to life, gaining 1.05% and 2.14% respectively.

Market sources indicated that prospective deals will only be encouraged by Tuesday's rate cut and more is expected on Jan. 30 from the Federal Open Market Committee.

"The market has proved again that it's in charge," a trader said. "It's really a bastard child, isn't it?

"It wants 75 [bps] it gets it, now it wants another 50 [bps]."

"The market gets what is wants," he said.

Yahoo! should seek target, analyst says

Yahoo! (Nasdaq: YHOO) stock was almost flat, dropping $0.02 to $20.01 as shareholders were getting restless.

In order to balance out the books Yahoo! announced it will put its staff through a round of layoffs after its earnings are reported on Jan. 29.

"Here you are in one of the most profitable and rapidly growing technology services areas and they find themselves doing cost reduction through layoffs," said David Garrity, an analyst with Dinosaur Securities LLC, according to a market source.

"Shrinking one's way to a prosperous future tends to be a problematic proposition," Garrity said.

In the meantime, the search engine is looking to acquire a media specialist to improve its advertising business, a market source said.

Garrity suggested Yahoo! continue to broaden its online advertising in the vein of its 2007 $1 billion acquisitions of the advertising firm BlueLithium Inc. and online ad exchange Right Media Inc., he said.

California's ValueClick and New York's Customer Acquisition Network Holdings Inc. are prime targets, he said.

Quebecor's day in court

Quebecor World (NYSE:IQW) stood before a bankruptcy court judge in New York on Wednesday as its stock was left at $0.10 with almost no place else to fall. The Montreal-based printer has secured a commitment for $1 billion in financing from Credit Suisse and Morgan Stanley.

Meanwhile, "... be assured that, going forward, we expect wages, salaries and benefits to continue uninterrupted. Quebecor World will continue to operate on a business-as-usual basis," Quebecor's chief executive officer Jacques Mallette said in a letter to the company's employees.

On the upcoming fight card, "I think there's a couple of big fights," a market source said.

One "between the bank and bond holders and the bond holders and the company," he said.

Still, "if you look at the valuations of the other performing printers, the opportunity to create a lot of value is pretty high," he said.

"There are a lot of people looking at the bonds with an eye towards improving the company's operation," he added.

The 1-3-5 rule: Fifth Third to buy First Charter

During its earnings conference call on Tuesday, Fifth Third Bancorp (Nasdaq: FITB) confirmed it will go ahead with its $1.1 billion merger with First Charter Corp. (Nasdaq: FCTR), a market source said.

In trading Wednesday, Fifth Third's stock was on the rise to $25.16, up $1.63 despite the uncertainty that exists over the deal which is rooted in First Charter's instability from its exposure to the mortgage business and credit crisis, the source said.

First Charter performed similarly as the afternoon recover took hold. The stock was up $1.13 to $26.94.

"We don't want to get out of it. First Charter was a very attractive strategic acquisition," Fifth Third chief executive officer George Schaefer said during the conference call. "While we obviously are not pleased with our stock price ... we'll see where the stock price is when we eventually close."

If the merger is completed, it will be a cash-and-stock transaction priced at $31 per share.

Post jumps on buyout offer

Post Properties, Inc. (NYSE:PPS) stock jumped $5.68 or 15.88% to $41.45 as it announced that its board of directors approved further discussions with Cadim and Williams Realty Advisors, LLC regarding Cadim's $44 to $47 offer for the company's common stock, according to a press release.

"As we've previously stated, our board of directors continually reviews strategies to enhance value for our shareholders. As a result of this review as well as input from several of our largest shareholders, our board has authorized us to explore a possible business combination to enhance potential value for our shareholders," said David Stockert, the company's president and chief executive officer, in the press release.

"In light of the board's decision to conduct a process and not enter into discussions with only one party, the board at this time has made no determination as to the adequacy of the Cadim-Williams proposal."

JP Morgan will act as Post's financial advisor.

Nabi tests the market

Nabi Biopharmaceuticals (Nasdaq:NABI) lost $0.04 to trade at $3.73 as it looked for suitors buy or merge with the company.

"With the sale of our biologics business unit, Nabi has a very strong financial position, a focused pipeline of vaccine programs and a right-sized and lean organization," said Dr. Raafat Fahim, newly-named president and chief executive officer of Nabi, in a press release.

"The primary goal of this strategic alternatives process is to maximize shareholder value and we feel Nabi is now streamlined and well-positioned to do so."

Nabi's principle products include NicVAX a nicotine conjugate vaccine and StaphVAX a staphylococcus aureus vaccine.

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