Ballmer has had enough Yahoo!; Fidelity National in LandAmerica grab; Panasonic, Sanyo just talking

By Aaron Hochman-Zimmerman

New York, Nov. 7 - Equities finished strong on Friday after a gut-wrenching week on Wall Street.

Still, deal-land was slow and sleepy as the Friday credit crunch set into the market.

"It's going to pick up at some point," a merger arbitrage analyst said, although "it could take six months or it could take 24 months."

Out on the floor, the history between Yahoo! Inc. and Microsoft Corp. attracted the attention of market gawkers, but most believed the serious chance for a deal was water long under the bridge.

Investors who follow the smaller deals appreciated an insurance sector merger between Fidelity National Financial Inc. and LandAmerica Financial Group Inc. that sent the target, LandAmerica, up 83% in trading.

Investors were not as appreciative of the deal Wells Fargo & Co. got for Wachovia Corp. Wells Fargo dropped on Friday, but its share price still has room to grow, a trader said.

Also, Panasonic Corp. and Sanyo Electric Co. Ltd. began open-ended talks that left options open but will likely end in a Panasonic acquisition of Sanyo, the two Japanese electronics manufacturers said.

Meanwhile, the Dow Jones Industrial Average ended better by 248.02, or 2.85%, at 8,943.81, while the Nasdaq Composite Index added 38.70, or 2.41%, to finish at 1,647.40.

The S&P 500 tacked on 26.11, or 2.89%, to close at 930.99.

Ballmer not looking for the whole Yahoo!

The market watchers - those who aren't sick of watching Microsoft and Yahoo! bicker - felt that some kind of partnership between the two could still be somewhat of a reality and beneficial to both.

Recent overtures by Yahoo! chief executive officer Jerry Yang to Microsoft to rekindle their on-again-off-again negotiations were met with what looked like a long-distance rejection.

Statements from Microsoft CEO Steve Ballmer at a conference in Sydney, Australia, seemed to remove the possibility of a revived merger.

"We are not interested in going back and re-looking at an acquisition," Ballmer said.

"We made an offer, we made another offer and it was clear Yahoo! didn't want to sell the business, and we moved on," he said.

"It doesn't seem like Microsoft is interested," an analyst said.

Shares of Yahoo! sank another $1.76, or 12.61%, to $12.20.

Shares of Microsoft added $0.62, or 2.97%, to close at $21.50.

All's Wells that ends Wells

The market reacted unenthusiastically to Wells Fargo's $11 billion share offer, but its purchase of Wachovia may be more of a coup than many have realized, a trader said.

Thursday's offering of 407.5 million shares of stock at $27.00 per share came in order to help Wells Fargo stay liquid throughout its buy of Wachovia - the "great buy of Wachovia," the trader emphasized.

"Folks don't realize how great a deal" the merger is for Wells Fargo, he said.

Wells Fargo finished the session on Friday lower by $0.05, or 0.17%, at $28.72.

"It will slowly move back over $30.00," the trader said.

Shares of Wachovia tacked on $0.19, or 3.53%, to end the day at $5.57.

Fidelity folds up LandAmerica

Share of both insurers launched as Fidelity National Financial inked an agreement to buy up LandAmerica Financial Group.

The agreement gives LandAmerica shareholders 0.993 shares of Fidelity stock for each share of LandAmerica stock, according to a joint press release.

The $125 million transaction is intended to reduce the combined debt of the new entity by $250 million.

Fidelity's title insurance subsidiaries will add liquidity to LandAmerica's insurance subsidiaries, Land Title Insurance Co. and Lawyers Title Insurance Corp.

The proceeds will then be used to repay debt under LandAmerica's revolving credit facility, private placement senior notes and possibly Fidelity debt.

Due to the structure of the deal, Fidelity expects "no material change" from its 30% debt-to-capitalization ratio, the release said.

Also, Fidelity affiliate Chicago Title Insurance Co. will provide LandAmerica with a $30 million standby secured credit facility at Libor plus 400 basis points.

However, the credit will only be available after Fidelity's due diligence period has expired.

Loans against the facility will be backed by LandAmerica's $155 million par value of auction-rate securities.

"We have always had great respect for [LandAmerica] and we are confident that the combination of our two companies will create the strongest and most financially sound title insurer in the country, with an unrivaled geographic and commercial footprint," Fidelity chairman William Foley said in the release.

"Our preliminary estimate, which must be confirmed during our due diligence period, is that we will realize at least $150 million in operational cost synergies throughout the combined operations, including the areas of corporate and administrative overhead, direct and agency operations and claims management and processing," he said.

Shares of Fidelity National Financial jumped by $2.88, or 34.49%, to end at $11.23.

Shares of LandAmerica Financial Group soared by $3.95, or 83.16%, to close at $8.70.

Panasonic, Sanyo set teams for talks

Two household names in electronics announced they have begun to explore a merger.

"Panasonic and Sanyo will immediately set up a project team, to start intensive discussion on the capital and business alliance between both companies," the companies announced on Friday.

All options are open, the two companies claimed, but the plan for Panasonic to acquire Sanyo aims "to maximize corporate values of both Panasonic and Sanyo to bring benefit for both companies' shareholders and all other stakeholders including customers and employees," the companies said in their joint statement.

The two pledged to disclose the progress of their discussions near the close of the year.

Shares of Panasonic were better by $0.73, or 4.87%, to finish at $15.73.

Mentioned in this article:

Fidelity National Financial Inc. NYSE: FNF

LandAmerica Financial Group Inc. NYSE: LFG

Microsoft Corp. Nasdaq: MSFT

Panasonic Corp. NYSE: PC

Wachovia Corp. NYSE: WB

Wells Fargo & Co. NYSE: WFC

Yahoo! Inc. Nasdaq: YHOO

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