Microsoft's new Yahoo! plan; Blockbuster nixes Circuit City deal; Anheuser-Busch, InBev wait on courts

By Aaron Hochman-Zimmerman

New York, July 2 - In what is taking on the air of a Rolling Stones farewell tour, Microsoft Corp. was back on the stage and is supposedly in talks with Time Warner Inc. and News Corp. to find a way to divide up Yahoo! Inc. in such a way that would leave Microsoft with the search business and the prospective partner with the remainder.

Another on-again-off-again deal, this one between Blockbuster Inc. and Circuit City Stores Inc., was axed by Blockbuster, but Circuit City said it is still seeking strategic opportunities.

Elsewhere, Anheuser-Busch Cos. Inc. is waiting to hear from Delaware Chancery Court to find out which way InBev NV will likely take what is shaping up to be a hostile bid for Bud.

In pharmaceuticals, Tang Capital Partners LP put a charge under Northstar Neuroscience Inc.'s shares as it announced an offer at a 50% premium.

Also, Bunge Ltd.'s buying binge continued as it announced a deal to buy a sugar processing division from Tate & Lyle plc less than a week after announcing a $4.4 billion deal to merge with Corn Products International Inc.

Meanwhile, the Dow Jones Industrial Average was beaten late in the day for 166.75, or 1.46%, to close at 11,215.51, while the Nasdaq Composite Index saw slammed for 53.51, or 2.32%, to finish at 2,251.46.

The S&P 500 gave up 23.39, or 1.82%, to close at 1,261.52.

Two for Yahoo!

After what now feels like a short breather, Microsoft is back on the trail of Yahoo!, but this time sheriff Ballmer may be ready to deputize a posse in the form of either Time Warner or News Corp.

If Microsoft was unable to take Yahoo! by itself, it seems the plan now is to find a deal to carve it up.

The deal of many moving pieces will only become more complicated as the ad sharing deal with Google Inc. will shortly be put through the sieve of a Justice Department anti-trust investigation, according to a report in the Washington Post.

Still, at least of few of the questions which need answers going forward will be answered by the shareholder meeting, now only days away on Aug. 1.

The meeting will determine the fate of Carl Icahn's slate of directors, if not the fate of the company.

Shares of Yahoo! (Nasdaq: YHOO) took on $0.68, or 3.37%, to end at $20.88.

Shares of Microsoft (Nasdaq: MSFT) were lower by $0.99, or 3.68%, to close at $25.88.

Bud, InBev wait on Deleware court

The story of InBev's interest in Bud has come to a stopping point.

The board has rejected the initial bid of $65 per share and although it has left the door open for a higher offer, InBev would rather play hostile.

So with no known schedule, the attention has shifted to Delaware's Chancery Court which will decide whether or not a simple majority or super-majority will be needed to oust the current board.

If the court finds against InBev on whether a super-majority is needed to remove the board, InBev may just tender for the shares, she said.

"This is going right on schedule with what I imagine InBev was expecting," said Morningstar analyst Ann Gilpin.

Anheuser-Busch's chief executive officer known as "The Fourth said he would reject the deal," she said, which leaves InBev either to up the offer or go hostile.

And "I don't think there's any reason why InBev will go beyond $65," she said.

Taking the bid hostile may cause problems with the work force and the community, but "it seems InBev would rather go hostile than pay more than $65," she said.

Still, for now the next step "depends on where the court in Delaware rolls," she said.

Blockbuster scrubs Circuit City deal

Blockbuster put its offer for Circuit City back on the shelf after taking a long look at the market conditions and the books of itself and its abortive target, an analyst said.

"Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster's shareholders to proceed with an acquisition of Circuit City," said Jim Keyes, Blockbuster's chairman and chief executive officer, in a statement.

"We continue to believe in the strategic merits of a consumer retail proposition that would bring media content and electronic devices together under one brand. We will pursue this strategy through our Blockbuster stores as a way to diversify the business and better serve the entertainment retail segment," he said.

Shares of Blockbuster (NYSE: BBI) took on $0.14, or 5.58%, to close at $2.65.

Shares of Circuit City (NYSE: CC) bled $0.23, or 9.02%, to finish the day at $2.32.

Tang fuels Northstar launch

Tang Capital announced its $2.25 per share offer for Northstar Neuroscience, which represents a 50% premium to Northstar's closing price on Tuesday.

Shares of Northstar (Nasdaq: NSTR) rocketed up by $0.34, or 22.67%, to $1.84 over the prospect of the pharmaceutical firm selling the remainder of its outstanding shares to Tang.

Tang already holds 18% of the company.

Bunge jumping

Bunge continued to roll along, announcing it will purchase the sugar trading and marketing division of Tate & Lyle after its June 24 agreement to buy Corn Products International.

"Bunge's strategy is to expand into complementary value chains, and sugar is an essential one," said Archie Gwathmey, Bunge's co-chief executive officer, in a statement.

Shares of Bunge (NYSE: BG) sank $4.34, or 4.13%, to end the day at $100.70.

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