Grey Wolf gets bid of its own; Kerkorian scoops up more Ford; pension funds contest Yahoo! severance

By Aaron Hochman-Zimmerman

New York, June 10 - Grey Wolf Inc. now has offers coming and going as the Houston-based driller announced that Precision Drilling Trust has made it an offer while it is in the middle of acquiring Basic Energy Services Inc.

Still, shares of each company were tame.

United Rentals Inc. stock was doing well, even if its $679 million tender offer is not an arbitrageur's delight.

On the other hand, Ford Motor Co. shares were down as Kirk Kerkorian's Tracinda Corp. made its own tender offer for $170 million of Ford stock, leaving investors to wonder what he has in mind for the slow rolling automaker.

Also in Michigan, Detroit-based pension funds were after Yahoo! Inc. to ditch its employee severance plan, which many see as a poison pill to ward off Microsoft Corp.

In the telecom sector, where merger talk can be cheap, Verizon Communications Inc. was approved to acquire Rural Cellular Corp. by the Department of Justice and is now waiting for the go-ahead from the Federal Communications Commission.

In Texas, the storied Hunt Petroleum Corp. once belonged to the soap opera-like Hunt family, but now belongs to XTO Energy Inc. after their $2.6 billion deal.

Meanwhile, the market was busy having a mixed day as the Dow Jones Industrial Average ended just higher by 9.44, or 0.08%, at 12,289.76, while the Nasdaq Composite Index gave back 10.52, or 0.43%, to finish at 2,448.94.

The S&P 500 also fell 3.32, or 0.24%, to close at 1,358.44.

Grey Wolf not the alpha dog?

Even while Grey Wolf is in the process of merging with Basic Energy, the company acknowledged the receipt of a $9 per share offer from Precision Drilling, a 21% premium over Grey Wolf's 30-day average share price.

"That's weird because they're already bidding for BE," a market source said.

Also, shares of Grey Wolf (NYSE: GW) traded through the $9 per share offer as it added $0.74, or 8.94%, to close at $9.02.

"It's not something you see very often," the source said, "it usually means that people are expecting an increased bid."

Precision Drilling said it believed its proposed transaction is superior to Grey Wolf's planned merger with Basic Energy.

Shares of Basic Energy (NYSE: BAS) dropped $1.25, or 4.11%, to $29.19.

Shares of Precision Drilling (NYSE: PDS) gave up $1.04, or 3.78%, to finish the day at $26.46.

United Rentals tenders

United Rentals announced it will accept bids for 31.4% of its outstanding stock at a price between $22 per share and $25 per share.

The up to $679 million stock repurchase, plus a further buyback and exchange of preferreds for the same amount, is mostly debt financed.

The offer was well received by the market, but "I don't think many arbs will be playing this one," said an equity analyst focused on merger arbitrage.

"It's a lay-up," he said.

Also, the failed buyout by Cerberus Capital "left a bitter taste in people's mouths," he said.

Still, "they're up 21% year to date ... and it's a decent premium," he said.

Shares of United Rentals (NYSE: URI) jumped by $2.59, or 13.28%, to $22.09.

Have you driven up Ford lately?

If you are Kirk Kerkorian, you haven't.

Kerkorian's Tracinda announced it will buy 20 million shares at $8.50 per share or $170 million, a 13% premium to the trading price.

Still, shares of Ford (NYSE: F) skidded by $0.24, or 3.77%, to $6.12.

An equity analyst only guessed that Kerkorian and Jerry York, the former chief financial officer of both Chrysler LLC and IBM Corp., have some sort of plan cooking.

Still, it is difficult to imagine they are packaging Ford for a sale, he said.

"You've got to wonder what they see in Ford right now," he said, but "Kerkorian and York are both smarter than I am on this."

However, at $8.50 per share, "if I were a holder, I would've tendered too," he said.

Many investors came to the same conclusion, and 1,016,959,620 shares were tendered, meaning the offer was more than 50 times oversubscribed.

Yahoo! holders fight over severance plan

At Yahoo!, some have called the company's new severance plan a poison pill designed to scare off Microsoft - and two Detroit-based pension funds plan to say the same if they are granted a July trial in Delaware's Chancery Court.

Also, Yahoo! sent notice to its shareholders in order to inform them that prior proxy commitments to vote with Carl Icahn are not binding.

However, Ironfire's president Eric Jackson claimed to be a part of a group of 150 shareholders with control over 3.2 million shares who intend to support Icahn, according to the San Jose Mercury News.

Shares of Yahoo! (Nasdaq: YHOO) gave up $0.18, or 0.68%, to $26.40.

Shares of Microsoft (Nasdaq: MSFT) were better by $0.18, or 0.65%, to $27.89.

Please hold for FCC approval

The lines of the telecoms were one step closer to tangling again as the Department of Justice approved Verizon's takeover of local provider Rural Cellular.

The Justice Department said Verizon will have to divest from six markets in order to complete the deal.

The file on the merger now sits on the desk of the FCC awaiting approval.

Shares of Verizon (NYSE: VZ) slipped $0.42, or 1.11%, to end at $37.52.

Shares of Rural Cellular (Nasdaq: RCCC) added just $0.02, or 0.04%, to close at $44.76.

The hunter becomes the hunted

XTO Energy announced that it will buy privately-owned Hunt Petroleum for $4.2 billion, according to a press release.

The deal consists of $2.6 billion in cash and $1.6 billion in stock, made up of 23.5 million shares at $67.50 per share.

XTO will take control of oil and natural gas fields mostly in Texas and Louisiana.

"The remaining properties offer expansive opportunities for development, while generating strong production and high-margin economics. With the current outlook for commodity prices and our development plan, we have facilitated a history-making deal for XTO which should generate over $1.2 billion in cash flow next year," said Bob Simpson, XTO's chairman and chief executive officer.

Shares of XTO (NYSE: XTO) fell $0.70, or 1.03%, to $67.02.

Superior Essex cables Korea

Superior Essex Inc. supported rumors that it has been talking to South Korea's LS Cable Ltd. about a deal which deliver Superior to LS for $45.00 per share, according to a press release.

The new offer is $9.00 per share better than the initial offer made on March 24.

Superior mentioned that no formal agreements have been reached.

Shares of Superior Essex (Nasdaq: SPSX) lost $1.34, or 2.95%, to finish at $44.10.

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