aQuantive deal on heels of 24/7 propels ValueClick, Yahoo!; Trump up; LIN lifted; Chuck up

By Ronda Fears

Memphis, May 18 - ValueClick Inc. spiked on takeover speculation as the next logical target in the online advertising space after Microsoft Corp. acquired aQuantive Inc. for roughly $6 billion - a whopping 85% premium - which traders said indicated there was very aggressive bidding.

Yahoo! Inc. also gained as it was rumored to be the top suitor for ValueClick and might even be a takeover target itself, traders said.

While virtually all the online ad names were higher, one trader said most were lingering below deal levels because of compliance issues that might complicate antitrust scrutiny and on the aQuantive deal in particular, legal risk for Microsoft to get approval in Europe.

"All these names were hot," another trader remarked. "Online advertising is growing gangbusters, so the internet companies and computer search engines want a bigger piece of that. Microsoft is an interesting entrant to that."

The aQuantive deal came a day after 24/7 Real Media Inc.'s $649 million buyout by WPP Group plc, Google Inc.'s buy of DoubleClick Inc. in mid-April for $3.1 billion and Publicis Group SA's buyout of interactive marketing firm Digitas Inc. at $1.3 billion.

Widespread takeover speculation in several sectors fueled strength in the broader markets, traders said, noting the Dow Jones Industrial Average hit yet another new high of 13,556.53.

LIN TV Corp. took off after it confirmed that it is on the auction block, or has retained J.P. Morgan Securities to explore strategic, including a possible sale. Trump Entertainment Resorts Inc. also spiked on news from late Thursday that it has been contacted by parties interested in buying the company, which has been for sale since March.

Charles Schwab Corp. was higher with two different rumors in circulation, traders said. One pegged the company paying a dividend on proceeds from its sale of U.S. Trust to Bank of America Corp. last November, while another put the company on the hunt for a merger with E*Trade Financial or TD Ameritrade Holding Corp. The $3.3 billion deal is expected to close in July. Charles Schwab shares (Nasdaq: SCHW) rose $2.74, or 7.23%, to $40.62.

International Game Technology surged as rumors of a private equity bid for the electronic and computerized gaming equipment maker from the options market this week spilled over into the stock on Friday. The stock (NYSE: IGT) gained $2.74, or 7.23%, to $40.62.

Takeover rumors spurred a rebound Friday in the customer relationship management software company Salesforce.com Inc. following a sharp decline the day before on downgrades in the stock due to higher expenses although bottom-line results were described as impressive. The stock (NYSE: CRM) advanced $2.82, or 6.56%, to $45.80.

STMicroelectronics NV spiked after Merrill Lynch analyst Andew Griffin said in a report that the chipmaker may be the target of a leveraged buyout after separating its flash-memory business. The stock (NYSE: STM) added 83 cents, or 4.27%, to $20.27.

ValueClick can play hardball

While Microsoft was criticized, and the stock slumped, on paying so much for aQuantive, traders said it indicated aggressive bidding that supported buying in the sector, particularly ValueClick as the last of the big online ad firms publicly traded.

Yahoo also was higher on speculation that it is the top suitor for ValueClick.

"Yahoo has to step up, you see," one trader said.

ValueClick (Nasdaq: VCLK) closed higher by $2.12, or 7.6%, at $30, coming down from the intraday high of $31.59 as the rise "was too tempting for profit takers," as one trader put it.

But chatter about what ValueClick might bring, in light of recent deals, put it well past where the stock closed Friday. Traders said they heard estimates from $55 per share to $72.

"Being the last one standing, ValueClick can now play hardball," the trader said.

"Its fundamentals are very close to aQuantive - nearly 30% sustainable growth being the most important - and ValueClick has more cash than aQuantive."

Yahoo also may be a target

Yahoo was the most mentioned suitor for ValueClick, the above trader said, but he added that there also was speculation that Yahoo is or will be a takeover target, mostly likely by Microsoft.

"Microsoft doesn't care that it overpaid. It is acquiring the most advanced advertisement technology on the internet. What's missing? The eyeballs. Yahoo provides the eyeballs but hasn't been able to adequately monetize a search engine. Panama will be trashed when Microsoft acquires Yahoo for the eyeballs and then has the ad technology to quickly monetize the search function," he said.

"If Microsoft pays this much over market for this purchase, I look for them to take out yahoo in the $60s.

Yahoo (Nasdaq: YHOO) settled near the day's high at $29.75 for an advance of $1.18, or 4.13% on the session.

aQuantive, Microsoft

While Microsoft was criticized, and the stock slumped, on paying so much for aQuantive traders said it indicated aggressive bidding that supported buying in the sector and fueled heavy buying in the space. aQuantive failed to reach the buyout price, however, on some concern about Microsoft passing regulatory scrutiny in the deal.

Microsoft's $66.50-per-share purchase price is an 85% premium to aQuantive's close on Thursday.

aQuantive (Nasdaq: AQNT) traded in a tight range of $63.45 to $63.99 before closing out at $63.79 for a gain of $27.92 on the day, or 77.84%. Some 45.2 million shares changed hands versus the norm of 1.6 million shares.

Acknowledging that paying such a substantial premium is something Microsoft has avoided in the past, chief financial officer Chris Liddell said the company believes aQuantive is "exactly the right company to buy" to help position it in a growing market.

Under the agreement, if the deal is broken up under certain circumstances, aQuantive would be liable to Microsoft for a $175 million breakup fee. But, if it fails for lack of regulatory approval under certain conditions, Microsoft in turn could be on the hook to aQuantive for $500 million.

Trump surge brings sellers

Trump did not disclose the identity of any suitor, or any potential takeover figures, and while the stock surged on its statement that there were several interested parties, one trader said there was heavy selling on skepticism.

The stock (Nasdaq: TRMP) closed better by $2.73, or 20.89%, at $15.80 on Friday after trading as high as $16.19, which followed a 3% decline the day before. The 52-week range on the stock is $12.98 to $23.80.

"With Trump's buyout terms being so ridiculous, it's hard to fathom anyone buying the company as a whole. Now if they sold The Marina or the Plaza in separate transactions I understand, but as one entity it would be more difficult, in my opinion," the trader said.

"If this alleged buyout does not materialize, look out, because Trump will be at $12 overnight. Longs better pray for a buyout otherwise they could be looking at another bankruptcy in the next couple of years. History will repeat itself. Trump's fundamentals remain weak and the properties remain third class; these things have not changed."

Trump Entertainment is the company that emerged bankruptcy in 2005, having been previously called Trump Hotels & Casino Resorts before filing bankruptcy the year before. The company had attempted to restructure in a number of ways before filing Chapter 11, the trader remarked.

In March, Trump hired Merrill Lynch to assist it in reviewing strategic corporate options that include a potential sale. The company said late Thursday the strategic committee recently received "preliminary and conditional indications of interest" from parties proposing a takeover.

LIN TV, Nexstar for sale

Providence, R.I.-based television broadcaster LIN TV surged after confirming widespread market chatter with an announcement that it is officially looking for bidders.

LIN's move follows Irving, Texas-based Nexstar Broadcasting Group Inc. announcing on Thursday that it was exploring a sale and had hired Goldman Sachs & Co. to assist in that process.

Recent deals in the space were impetus for the measures, one trader said, noting that last week, The New York Times Co. sold its broadcast group to Oak Hill Capital Partners for $575 million and last month Clear Channel Communications Inc. sold its television group to Providence Equity Partners Inc. for $1.2 billion.

But a view that this is the top of the market sparked hefty selling in LIN as well as Nexstar, the trader said. He was particularly a seller into the LIN rally, noting the stock was near the 52-week high of $17.36 just before the company acknowledged a potential sale.

LIN (NYSE: TVL) traded in a range of $16.70 to $20.24 on Friday before settling at $18.88 for a gain of $2.17 on the day, or 12.99%.

"The upward momentum is over. There's no longer any reason to be long LIN TV. The effect of the layoffs over the last couple of years is already reflected in the stock price, and it's at a new high," the trader said.

Nexstar (Nasdaq: NXST) gained 30 cents, or 2.25%, to close Friday at $13.63, following a rise of about 24% the day before.

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