O'Reilly buys CSK; National City looks at options; Clear Channel continues court battle

By Aaron Hochman-Zimmerman

New York, April 1 - Stocks were on a roll on Tuesday while in deals O'Reilly Automotive Inc. took the opportunity to announce it struck a deal to roll up CSK Auto Corp. CSK shares leapt 25.67%.

In finance, National City Corp. was only slightly better as it brought Goldman Sachs on the team to explore strategic options.

Meanwhile in media, Clear Channel Communications Corp. did not show improvement on the strong day for stocks as it, along with its private equity buyers, Thomas H. Lee Partners and Bain Capital Partners, continued to trade shots with the team of banks slated to finance the transaction.

Yahoo! Inc.'s shares were also unable to advance with the rally as it spent another day peering over the walls at Microsoft Corp., which refused to offer any grander a wooden horse to soften Yahoo!'s defenses.

Also, Alliance Data Systems Corp. traded better as Alliance was rumored to be mulling another drop in its acquisition price.

After its failed deal with Bain Capital, 3Com Corp. was still moving up as it was disclosed that chairman Eric Benhamou recently bought 500,000 shares.

The Dow Jones Industrial Average screamed skyward by 391.47, or 3.19%, to finish the session at 12,654.36, while the Nasdaq Composite Index added 83.65, or 3.67% to finish at 2,362.75.

The S&P 500 swelled by 47.48, or 3.59%, to close at 1,370.18.

O'Reilly takes CSK

Shares of O'Reilly Automotive (Nasdaq: ORLY) added on $0.89, or 3.12%, to $29.41 as it announced its agreement to buy CSK Auto (NYSE: CAO) for $1 billion, according to a press release.

CSK shareholders will receive $11 per share in O'Reilly common stock as well as $1 in cash per share of CSK stock.

As part of the $1 billion transaction, O'Reilly will take on $500 million in debt.

"As part of a stronger, more financially flexible company, shareholders, creditors and suppliers will have a meaningful opportunity to participate in the development of a company that will be well positioned to be a nation-wide leader in the automotive aftermarket industry," Larry Mondry, CSK Auto's president and chief executive officer.

Shares of CSK launched $2.39, or 25.67%, to $11.70.

The deal is expected to close within two to three months, a market source said.

Clear Channel legal fights, new terms

Clear Channel's shares (NYSE: CCU) slipped $0.72, or 2.46%, to end at $28.50 as the lenders on the $26 billion deal for Thomas H. Lee and Bain Capital to buy Clear Channel now want a three-year bridge loan to replace the initial seven-year, six-month loan, according to a market source.

On March 26, Clear Channel along with Thomas H. Lee and Bain filed suit in Texas and New York against the banks for what the plaintiffs called an attempt to "run out the clock" on the deal, according to a Clear Channel press release.

On Tuesday, the lenders claimed to be ready to fulfill the agreements in the commitment letter and accused the purchasers of spoiling for a legal fight, according to the market source.

National City talks strategy with Goldman

Shares of National City (NYSE: NCC) tacked on $0.04, or 0.40%, to $9.99 as it announced it will review strategic options with the help of Goldman Sachs.

However, "National City said that there can be no assurance that this review will result in the company undertaking any particular transaction," it said in a release.

"The review has no impact on National City's day-to-day operations," said National City chairman, president and chief executive officer Peter Raskind.

"We remain focused on providing our customers with the high quality products and personal service that have long differentiated us in the marketplace," he added.

Alliance may make offer more friendly

Shares of Alliance Data Systems (NYSE: ADS) picked up $1.38, or 2.90%, to close at $48.89 as it was rumored that Alliance may drop its price another $400 million to ensure its deal with Blackstone (NYSE: BX) will be completed.

Alliance dropped its price to $76.00 per share from $81.75 on March 18.

Alliance has accused Blackstone of stalling in order to reach April 17 when either side may end the $6.7 billion deal initially agreed upon on May 17, 2007.

Microsoft siege unflagging

Shares of Yahoo! (Nasdaq: YHOO) lost $0.43, or 1.49%, on the rally day to end at $28.50 as many expect that Microsoft (Nasdaq: MSFT) will be content to wear down Yahoo! over time as it became more apparent that no other serious offers will enter the arena, a market source said.

Microsoft shares improved by $1.12, or 3.95%, to $29.50.

Microsoft made a $45 billion unsolicited offer for Yahoo! on Feb. 1.

3Com not done?

Shares of 3Com (Nasdaq: COMS) took on $0.08, or 3.49%, to close the day at $2.37 after chairman Eric Benhamou bought 500,000 shares last week, according to a market source.

3Com's deal to be acquired by Bain Capital Partners fell apart on March 20.

The deal was not likely to receive final approval from the U.S. government's Committee on Foreign Investment in the United States (Cfius) due to the participation of China's Huawei Technologies.

Huawei is thought to be closely tied to the Chinese government and military.

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