JPMorgan rumored on the hunt; satellite radios may get FCC approval; Stewart considers offer

By Aaron Hochman-Zimmerman

New York, July 23 - XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. came closest yet to having their merger approved by the Federal Communications Commission, according to reports.

The reports offered few reasons for why commissioner Deborah Tate seemed ready to approve the deal (and offered no explanation for why she still had not signed a formal approval), but investors were willing to buy the rumor as both stocks performed well.

Other rumors crept up surrounding a renewed push by JPMorgan Chase & Co. to buy one of the banks left limping by the subprime crisis.

The name National City Corp. entered the minds of some investors as its shares closed up by 7.78%.

Still, the big gainer on the day was Philadelphia Consolidated Holding Corp. which agreed to a $4.4 billion deal with Tokio Marine Holdings Inc. and shot up 64.36%.

Also, Stewart Enterprises Inc. agreed to review the new $11 per share offer from Service Corp. International rather than give it an early wave off as it did to the $9.50 per share offer.

Elsewhere, Yahoo! Inc., which had maintained its share price after moderately disappointing earnings, finally fell sharply at the end of the session on Wednesday.

According to many in the market, the missed earnings target gives Microsoft Corp. very little incentive to bring a big offer to Yahoo!'s doorstep.

Meanwhile, in the broader market, the Dow Jones Industrial Average ended up by 29.88, or 0.26%, at 11,632.38, while the Nasdaq Composite Index added 21.92 or 0.95%, to finish at 2,325.88.

The S&P 500 saw gains of 5.18, or 0.41%, to close at 1,282.18.

JPMorgan on the prowl, again?

It seemed to some that the planets were aligning in favor of a JPMorgan buyout of National City, a trader said.

While JPMorgan was rumored to be on the march with its buyout boots tied tight, the Wall Street Journal reported that National City was looking for a buyer to cash in its money-management division.

"The FDIC would give it the thumbs up too," the trader said as talk of bank deals reemerged.

Still, the trader noted that other targets for JPMorgan may exist in Washington Mutual Inc. or SunTrust Banks Inc.

Shares of National City (NYSE: NCC) gained $0.34, or 7.78%, to $4.71.

Shares of JPMorgan (NYSE: JPM) added on $1.10, or 2.69%, to $41.96.

Stewart looks at offer

Service Corp. International's initial offering of $9.50 per share was quickly brushed aside by Stewart Enterprises, but the new offer of $11 per share was enough to hold the board's attention.

"The directors unanimously approved the formation of a committee of independent directors to evaluate alternatives available to the company to maximize shareholder value, and authorized the committee to hire an investment banker or other advisors as the committee deems appropriate," Stewart said in a press release.

Shares of Stewart (Nasdaq: STEI) improved by $0.50, or 5.79%, to end at $9.14.

Shares of Service Corp. (NYSE: SCI) were better by $0.07, or 0.71%, to close at $9.94.

Rumors orbit satellite radios

The satellite radio deal may have entered a new phase on Wednesday as a tentative deal for approval may have been reached in the halls of the FCC.

Reports said swing voting commissioner, Deborah Tate, may have agreed to approve the merger, but details of the supposed deal were at best broken and unreadable.

Still, investors were encouraged by the prospect of putting this lengthy process to rest.

Shares of XM Satellite Radio (Nasdaq: XMSR) tacked on $0.94, or 10.33%, to close the session at $10.04.

Shares of Sirius Satellite Radio (Nasdaq: SIRI) were better by $0.30, or 12.61%, to sign off at $2.68.

Tokio Marine buys insurance

Tokio Marine Holdings announced that it will buy insurer Philadelphia Consolidated for $61.50 per share or $4.4 billion.

The all cash offer represents a 73% premium to Tuesday's closing price.

"Expansion of revenue and profits from international business is the driving force of Tokio Marine's mid- to long-term growth strategy," said Tokio Marine president, Shuzo Sumi in a statement.

"The acquisition of Philadelphia Consolidated is consistent with our aspirations of expanding globally and realizing a well-balanced business portfolio," he said.

"Philadelphia Consolidated's strong distribution relationships with brokers and agents and our local market knowledge acquired over almost 50 years will provide Tokio Marine with a substantial platform in its effort to realize superior growth and profitability in the U.S. and on an international scale," said James Maguire, chairman of Philadelphia Consolidated.

The deal is expected to be financed with Tokio Marine's cash on hand as well as a non-convertible bond issue.

Shares of Philadelphia Consolidated (Nasdaq: PHLY) soared on the news by $22.88, or 64.36%, to $58.43.

The deal is expected to close in the fourth quarter.

Yahoo! sees delayed drop on earnings

It took investors some time, but they began to walk away from Yahoo! after it reported that earnings dropped by $30 million or about 18% in the second quarter.

The results were close to, but not quite up to the level of analysts' expectations, which left Yahoo! in even less of a position to demand a higher offer from Microsoft.

"Yahoo! is executing against its strategy, and we believe is well positioned for long-term growth and maximizing stockholder value," said the ever-optimistic Jerry Yang, Yahoo!'s chief executive officer.

Still, to many, Yahoo! appears in a shoddy state. The company missed earnings expectations and goes into its Aug. 1 shareholder meeting as shareholder advisors Glass Lewis & Co. recommended against reelecting chairman Roy Bostock, a market source said.

Shares of Yahoo! (Nasdaq: YHOO) slipped by $1.01, or 4.72%, to end at $20.39.

Shares of Microsoft (Nasdaq: MSFT) added $0.63, or 2.44%, to close at $26.43.

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