General Dynamics' sights on Jet Aviation; Fleetwood holders look for value; some hope on Take-Two, EA

By Aaron Hochman-Zimmerman

New York, Aug. 19 - Another pounding for equities may have put a sour disposition in the market, but General Dynamics Corp. heard few complaints about its proposed acquisition of Switzerland's Jet Aviation Management AG from Permira Advisers LLP.

The deal is expected by many to stay relatively clear of federal regulators.

Fleetwood Enterprises Inc. may be a market creation of Frankenstein who has stitched the housing and auto markets together.

The company, which has been burned by the villagers of the homebuilding and auto sectors, was asked to look at its options by major stakeholder Robert Robotti.

Also, the names Take-Two Interactive Software Inc. and Electronic Arts Inc. were heard again in deal-land as Electronic Arts decided to allow its tender offer for Take-Two to expire.

However, this time no renewal is expected, which caused some to speculate that a friendlier offer from Electronic Arts may be forthcoming.

Meanwhile, the Dow Jones Industrial Average was damaged again for 130.84, or 1.14%, to close at 11,348.55, while the Nasdaq Composite Index sank 32.62, or 1.35%, to finish at 2,384.36.

The S&P 500 bled 11.92, or 0.93%, to close at 1,266.68.

Cross a homebuilder with an automaker...

Robert Robotti and the company which bears his name are on the road in search of a maximized value for the 5.4% stake they own in mobile home producer Fleetwood Enterprises.

When asked about Robotti's intensions, Avondale Partners analyst Kathryn Thompson said: "Primarily to keep the company from going out of business."

"They need capital ... They have a $100 million put due Dec. 15," she said.

Selling all or a piece of the business is always a possibility, she said.

"That's been talked about for three or four years," said Thompson, who has covered Fleetwood since 2001.

Other major holders have sent letters to the company in the past; another letter "may actually get something done," she said about Robotti's announcement.

The stock right now is "a perfect short," she said. "It's a vehicle that costs as much as a mortgage and that also guzzles gas."

The housing market's dive served to help the mobile home industry for a brief time, but the hard times have caught up, even with the homes that can run away.

Especially in large retiree states like California and Florida, the economy and housing market has been "so incredibly tough," she said.

A trader was no less wary of the stock.

"The only thing Robotti can do to save his 'investment' is to buy a couple hundred motor homes," a trader said.

As a hybrid of a homebuilder and an auto manufacturer, Fleetwood Enterprises finds itself in the crosshairs of both the housing and the energy crisis and shares are trading near all-time lows.

When asked what Robotti's options are, the trader said: "Make noise."

"If he wants to help them, he should buy a bunch of stock from the company," he said, "They need cash."

Shares of Fleetwood Enterprises (NYSE: FLE) traded unchanged at $2.75.

Jet Aviation to join General Dynamics

Defense and aviation player General Dynamics will fly its flag over Switzerland's Jet Aviation, which is held by the Permira Funds, after the two agreed to a deal worth CHF 2.45 billion or $2.25 billion, according to a press release.

"Under the Permira Funds' ownership, Jet Aviation has become a global market leader in business-aviation services; as a unit of General Dynamics, Jet Aviation will support one of our core growth areas," said Nicholas D. Chabraja, General Dynamics chairman and chief executive officer in a statement.

Market watchers do not expect to hear names like Cfius (Committee on Foreign Investment in the United States) or the host of other regulatory bodies that pop up when defense contractors start making deals, JSA Research analyst Paul Nisbet said.

"I don't see any reason for concern in that area," he said, including the Commerce and Justice Departments.

In aviation terms, everything seems to be in the green for the deal.

"It's a good addition for the Gulfstream line," he said.

Shares of General Dynamics (NYSE: GD) slid by $0.25, or 0.27%, to end at $91.99.

The deal is expected to close in the fourth quarter.

EA tender offer to expire... again

It may have felt like another telling of the same story to some, but dust was kicked up in the market over the possibility that Electronic Arts and Take-Two may finally become one.

Electronic Arts decided not to renew its tender offer for Take-Two for the sixth time.

The offer of $25.74 per share did not attract enough shareholders to jump ship against the better judgment of the makers of the wildly popular Grand Theft Auto 4.

Some said the possibility of a friendly offer still existed between the two; others began to feel as though the deal has missed too many chances already.

Shares of Take-Two (Nasdaq: TTWO) fell by $0.68, or 2.86%, to $23.07.

Shares of Electronic Arts (Nasdaq: ERTS) gave up $1.33, or 2.78%, to $46.43.

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