Target rejects Pershing plan; Elliot pulls Epicor offer, BGH cancels tender for Buckeye

By Cristal Cody

New York, Nov. 21 - A hint of blue skies ahead sent stocks up Friday with the news that President-elect Barack Obama will announce his economic team on Monday.

Stocks also received a boost after the Federal Deposit Insurance Corp. voted Friday to approve guarantees up to $1.4 trillion in bank debt for more than three years as part of the financial bailout.

Some of the gains lost in a two-day sell off were erased Friday with more than a 5% jump in the markets.

The Dow Jones Industrial Average rose 6.54% to close at 8,046.42.

The Standard & Poor's 500 index closed up 6.32% to 800.03 and the Nasdaq rose 5.18% to 1,384.35.

The uptick didn't help Citigroup Inc., though, as its shares fell a further 19.96% to close Friday at $3.77 after trading as low as $3.05.

Citigroup chief executive Vikram Pandit and chief financial officer Gary Crittenden held a meeting Friday but no news emerged about any potential sales as was previously hoped.

The news a day earlier that Saudi investor Prince Alwaleed bin Talal would increase his stake in Citigroup to 5% from less than 4% also seemed to cause more concern than confidence.

Citigroup said earlier this week that it will cut an additional 53,000 jobs.

Friday also marked the end of several potential deals in the works.

Target Corp. said in a statement after the market closed that it was rejecting a proposal to spin off its land into a real estate investment trust and sell a 20% stake.

Elliott Associates LP terminated its tender offer to acquire Epicor Software Corp. for $7.50 a share in cash after the stock plummeted in value this week.

BGH GP Holdings LLC also ended its tender offer for Buckeye GP Holdings LP after a special committee recommended against the deal.

One deal, though, still looks on track.

Philadelphia Consolidated Holding Corp. said Friday that it received the last regulatory approval needed for its acquisition by Tokio Marine Holdings Inc.

Target says no dice

Pershing Square Capital Management unveiled its revised proposal Wednesday to lift Target's stock price through the creation of a real estate investment trust.

Target said Friday that any potential value created by the deal does not make up for the costs, operating risks and loss of financial flexibility that it would take to execute.

The retailer said several concerns remain, including a meaningful risk to its debt ratings, borrowing costs and liquidity.

The company's shares closed up 0.29% at $28.08 but had fallen 2.07% in after hours trading.

Elliot backs out of Epicor bid

Elliott Associates said its $7.50 a share offer represented a 109% premium over Epicor's current market price.

Shares fell 15.04% to close Friday at $3.05, a new low and down from an annual high of $12.65.

"Epicor's shares have plummeted 70% to date this year and your annual guidance and visibility into the future is weak," Jesse Cohn, Elliot's portfolio manager, said in a letter sent Friday to Epicor's directors. "In light of these facts and the incredible market uncertainty, we would have anticipated that our all-cash, significant premium offer would at least have merited a meeting or discussion with us."

Irvine, Calif.-based Epicor had recommended shareholders reject Elliot's latest bid, as well as a previous offer of $9.50 a share.

Earlier this week, Elliot had extended its tender offer to Dec. 3. As of Tuesday, about 24% of its shares had been tendered.

Elliot, a New York-based hedge fund firm that holds 12.5% of Epicor's common stock separately from the tender offer, left the door open and said it remains interested in a dialogue with the company "to reach an agreement that would maximize shareholder value."

Horacio Zambrano, a research analyst with Ross Macmillan Jefferies & Co., said it's probably Elliot's last run at Epicor for a while.

"We don't think they're going to make another offer," he said.

A poison pill in place makes any hostile takeovers difficult.

"The poison pill complicates everything," Zambrano said. "Anybody looking to do a non-amicable deal would have to elect a new board of directors to remove it, and the soonest they would get a chance to do that is next spring at the next board meeting."

Epicor said in a statement Friday that the company is committed to building stockholder value, including plans for a new product release in the fourth quarter.

BGH cancels Buckeye offer

Buckeye shares fell 18.71% to close at $12.99 after trading as low as $11.63 on news that BGH GP Holdings pulled its $17.50 a unit tender offer.

BGH already owns 62% of Buckeye's outstanding units and all of the outstanding units of MainLine Management LLC, which controls the company.

An analyst who spoke on condition of anonymity said Friday that the offer was holding the stock price up.

"The whole sector has come down pretty significantly," he said. "The offer was withdrawn and it's come back to the performance of the rest of the group at this point."

Buckeye shares have traded from $9.51 to $29.92 over the past year.

Tokio buyout on track

Philadelphia Consolidated Holding shares rose 4.83% to $60.80 Friday, closing the spread after the Financial Services Agency of Japan cleared the way for the merger.

Tokio Marine plans to buy the U.S. insurer for $4.7 billion, or $61.50 a share, in cash.

Shares of the Japanese insurer fell 4.18% to close at $20.41.

The companies expect to the merger to close on Dec 1.

Mentioned in this article:

Buckeye GP Holdings LP NYSE: BGH

Citigroup Inc. NYSE: C

Epicor Software Corp. Nasdaq: EPIC

Philadelphia Consolidated Holding Corp. Nasdaq: PHLY

Target Corp. NYSE: TGT

Tokio Marine Holdings Inc. OCT: TKOMY

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