Omnicare up on takeover rumors; GM up as contract details emerge; hopes rise for fourth quarter

By Evan Weinberger

New York, Sept. 28 - Omnicare Inc. convertibles continued to rebound as rumors of a takeover percolated throughout the week. General Motors Corp. convertibles regained some of the value they lost Thursday, while Ford Motor Co. continued to slip.

Kendle International Inc., Vornado Realty Trust and Molson Coors Brewing Co. slipped in trading Friday, while Intel Corp. gained some value.

But as the third quarter drew to a close Friday, traders reported that business dried up as customers tended to their books. "[I] think accounts are quiet due to month's end," one trader said.

No new issues came to market Friday, as expected, and the new issues from the last two weeks haven't been terribly active, although most have been well-received. That's mostly due to their size, market watchers have been saying.

With the third quarter coming to a close, and the credit crunch at least giving the impression of alleviating, observers are hoping for more new issues and increased trading activity in the last three months of 2007. "[It] seems like market is open again to new issues," the trader said.

Others said they expected the market to liven up as the calendar turns. "I think ultimately it could be better than the third quarter," an analyst said.

He added that the uptick in new issues as September came to an end could portend a comeback in the coming weeks and months. "It's quite possible the next few weeks will be better than what we've seen," he said.

But all of these assertions came with a caveat. While it appears that the credit constriction has abated, it's still not entirely clear whether that's the case. "Toward the end of the year you should get more going on," another trader said. "The damage, nobody really understands what it is yet. You've got a lot of guys sitting around wondering what to do."

The third quarter came to a close with a whimper on Wall Street, despite ending the quarter higher. While positive reports on inflation, consumer spending and construction spending all kept stocks from falling significantly, investors wait warily for the October corporate earnings season.

The Dow Jones Industrial Average trickled down 17.31 points, or 0.12%, to 13,895.63, on Friday.

The Nasdaq dipped to 2,701.50, a loss of 8.09 points, or 0.30%.

And the Standard & Poor's 500 gave back 4.63 points, or 0.30%, to close at 1,526.75 on Friday.

Omnicare rumors spark revival

Several weeks ago, Covington, Ky.-based geriatric pharmaceutical producer Omnicare was the subject of takeover speculation. "They were rumored to be a deal stock," one trader said. There were no details to the rumors, and they quickly faded.

But the company's stock has made a comeback over the last week, a trader said, despite there being no real news involving the company in recent days. That's led to increased chatter that the company is ripe for a deal again.

Omnicare's convertibles have been hitched to the company's stock this week. The company's 3.25% convertible senior debentures due Dec. 15, 2035 closed Friday at 80.75 versus a closing stock price of $33.13 Friday. They finished trading at 80 5/8 versus a stock price of $32.18 on Thursday.

Omnicare stock (NYSE: OCR) gained 95 cents, or 2.95%, on Friday.

GM-UAW details revealed

Details of Detroit-based General Motors' labor deal with the United Auto Workers were released Friday. Among the concessions the union made, new workers will make a lower starting salary than they did before and health care and pensions for retirees were put under the control of a private trust, with estimated savings to GM of around $3 billion per year. GM agreed to produce cars at 16 American plants over the life of the contract.

Local chapters of the UAW approved the deal Friday, and the union's 73,000 members are set to vote on it this weekend.

Although they were down early, GM's four convertibles rallied and closed up on Friday.

GM's 4.5% series A convertible notes due March 11, 2032 (NYSE: GXM) gained 4 cents, or 0.19%, Friday to close at $21.93.

The company's 5.25% series B convertible notes due March 11, 2032 (NYSE: GBM) added 13 cents, or 0.61%, for a $21.29 close Friday.

The company's 6.25% convertible senior debentures due July 15, 2033 (NYSE: GPM) added 14 cents, or 0.60%, to close at $24.49.

The last of the group, GM's 1.5% convertible senior debentures due May 31, 2009 (NYSE: GRM) closed at $28.26, a gain of 13 cents, or 0.46%, on Friday.

GM stock (NYSE: GM) closed 24 cents, or 0.66%, higher Friday at $36.70.

Dearborn, Mich.-based Ford, on the other hand, saw its convertibles slip for a second consecutive day. Ford's 4.25% convertible senior notes due Dec. 15, 2036 closed at 116 3/8 versus a closing stock price of $8.49 on Friday. They closed at 117 5/8 versus a stock price of $8.63 on Thursday.

Ford stock (NYSE: F) dropped 14 cents, or 1.62%, on Friday.

Kendle, Molson Coors, Vornado all slip

Convertibles from three different sectors saw modest declines Friday.

Cincinnati-based clinical research firm Kendle saw its 3.375% convertible senior notes due July 15, 2012 close at 110 versus a stock price of $41.53 on Friday. They closed Thursday at 111.262 versus a stock price of $41.57.

Kendle stock (Nasdaq: KNDL) slipped 4 cents, or 0.10%, on Friday.

Montreal-based Molson Coors Brewing had its 2.5% convertible senior notes due July 30, 2013 close at 111.125 versus a closing stock price of $99.67. They finished trading Thursday at 111 versus a stock price of $99.56.

Molson Coors stock (NYSE: TAP) added 11 cents, or 0.11%, on Friday.

New York-based real estate investment trust Vornado's 3.875% exchangeable senior debentures due April 15, 2026 closed at 97.75 versus a closing stock price of $109.35 on Friday. They closed Thursday at 98.125 versus a stock price of $109.69.

Vornado stock (NYSE: VNO) slipped 34 cents, or 0.31%, on Friday.

Intel ends week up

Intel's 2.95% junior subordinated convertible notes due Dec. 15, 2035 closed at 103.75 versus a closing stock price of $25.86 on Friday. They finished trading Thursday at 103 3/8 versus a stock price of $25.76.

Shares of the Santa Clara, Calif.-based semiconductor producer (Nasdaq: INTC) gained 10 cents, or 0.39%, on Friday.

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