Interwoven bid likely all investors will get; closing concerns widen spread on American Land Lease stock

By Cristal Cody

New York, Jan. 23 - No other bidders are expected to top Autonomy Corp. plc's $16.20-a-share bid for Interwoven, Inc., a market observer said Friday.

In other deals, investors still consider Green Courte Partners LLC's acquisition of American Land Lease, Inc. a little risky, with the spread widening for a few reasons, an analyst told Prospect News.

In regulatory decisions on Friday, the Federal Trade Commission approved Dow Chemical Co.'s acquisition of Rohm & Haas Co. The companies said they are discussing details for closing the $15.4 billion deal.

Also on Friday, investors drove shares of Forestar Group, Inc. up $2.85, or 30.84%, to close at $12.09 on the chance the company will accept an unsolicited $15.00-a-share cash proposal from Holland Ware.

Austin, Texas-based Forestar Group's board said it will evaluate the offer, a 62% premium over the company's closing price of $9.24 on Thursday.

Speculation on Friday sent Wyeth shares up $4.91, or 12.64%, to close at $43.74 on the possibility of a merger with rival Pfizer Inc. Pfizer shares closed Friday at $17.45, up 24 cents, or 1.39%.

Pfizer representatives did not immediately return a call for comment. Wyeth spokesman Douglas Petkus said the company's policy is to "not comment on marketplace rumor."

On Wall Street, stocks were mixed.

The Dow Jones Industrial Average fell 45.24 points, or 0.56%, to close at 8,077.56, while the broader indexes advanced. The S&P 500 index rose 4.45 points, or 0.54%, to 831.95, and the Nasdaq Composite index rose 11.80 points, or 0.81%, to 1,477.29.

Autonomy offer expected to stand

Autonomy said it expects its $775 million buyout of Interwoven to close in the second quarter of 2009.

The company, based in England, announced the offer for San Jose, Calif.-based Interwoven on Thursday. The bid represents a premium of 36.8% above Interwoven's $11.84 closing share price on Wednesday.

Interwoven's stock lost a penny, or 0.06%, to close Friday at $15.68.

Mark Schappel, a Benchmark Co. analyst, said Friday that another bidder is not likely to top the offer.

"We believe investors are receiving a good price given the current deal climate and given the meltdown in the markets in general and software stocks in particular," he said in an investors note.

"We think another bidder is unlikely to emerge ... because the more motivated buyers of IWOV's content management software have already made purchases and are unlikely to go back to the well to round out their recent prizes with more capabilities," Schappel said.

Autonomy has bulked up through the buyouts of 11 companies since 2003.

Schappel said the company "employs an aggressive acquisition strategy, acquiring other software vendors to expand its customer base and harvest maintenance revenue."

American Land Lease buyout conditions

On Friday, Green Courte extended the $14.20-a-share cash tender offer for outstanding shares of American Land Lease to Feb. 5.

The $438 million offer was scheduled to expire Thursday, but Green Courte said that some conditions to the closing are pending. Additional details were not available Friday.

As of Thursday, 85.5% of shares had been tendered.

Shares of Clearwater, Fla.-based American Land Lease rose 7 cents, or 0.52%, to close at $13.55 on Friday.

Paul Adornato, an analyst with BMO Capital Markets, said the spread is wider for a few reasons, including a below-average $10 million breakup fee that creates uncertainty about the deal's closing.

Also, as a condition for the merger, Green Courte required that the seven banks involved consent to the acquisition.

"The reason this is a potential concern is that American Land Lease was in the process of trying to renegotiate some of its loans, particularly the ones that are related to the construction loans for development properties that are currently under way," Adornato said.

"American Land Lease has expressed optimism they would be able to get the consent of the banks and renegotiate some of these potentially troublesome loans," he said. "Despite their assurances to the contrary, there is always the possibility the lenders would not approve of the transaction because of the outstanding debt issues."

Once this deal is finished, more could be in the works for Green Courte.

"If there were other suitable acquisitions out there, they would pursue them even this year," Adornato said. "Green Courte's strategy is to assemble a large enough portfolio and then take the entity public."

Dow moves to close on Rohm & Haas

Shares of Rohm & Haas rose $5.36, or 8.87%, to close Friday at $65.82 after the Federal Trade Commission approved of the company's acquisition by Dow Chemical.

Dow Chemical and Rohm & Haas said they are discussing the closing of the $15.4 billion buyout.

The commission's clearance was the last regulatory approval needed.

Dow Chemical's stock fell 5 cents, or 0.35%, to close at $14.33 in trading Friday.

Mentioned in this article:

American Land Lease, Inc. NYSE: ANL

Autonomy Corp. plc London: AU

Dow Chemical Co. NYSE: DOW

Forestar Group, Inc. NYSE: FOR

Interwoven, Inc. Nasdaq: IWOV

Pfizer Inc. NYSE: PFE

Rohm & Haas Co. NYSE: ROH

Wyeth NYSE: WYE

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