Cheesecake Factory (CAKE) Higher on LBO Rumor

Shares of Cheesecake Factory Inc. (Nasdaq: CAKE) are higher in early action on rumors the company is the target of an LBO. The stock is 6.8% higher this morning.

Stifel Nicolaus Comments on Pearson plc (PSO) Takeover Speculation

Stifel Nicolaus comments on recent speculation, reported late yesterday by "The Business", that private equity firm Kohlberg Kravis Roberts (KKR) is looking at a potential LBO of Pearson plc (NYSE: PSO) for Ј7 billion or $13.7 billion (a 4% premium to yesterday's close).

The firm said, "Our SOTP analysis suggests the company can do better. Based on purchase price multiples involving comparable assets in recent transactions, we derive a fair value ranging from $17 at the low end to $23 at the high end. We would also note that according to the report, KKR has yet to make contact with Pearson, and thus Ј7 billion is merely a number at this point."

Gap Could Sell Itself in Pieces - Analyst

Prudential upgrades Gap Inc. (NYSE: GPS) from Underweight to Neutral, says board is meeting today and company has engaged service of Goldman Sachs. Says company may be looking to sell the company in pieces to more than one buyer.

UBS Doesn't See Private Equity Buyout of SMI, Downgrades

UBS downgrades Semiconductor Manufacturing International (NYSE: SMI) from Neutral to Reduce, saying the company is an unlikely candidate a private equity buyout.

Shares of Semiconductor Manufacturing ramped 22% on Wednesday on rumors the company could be a takeover target.

Chapman Capital Wants Cypress Semi (CY) to Split Off SunPower (SWPR), LBO for Core Biz

Activist hedge fund Chapman Capital sent a letter to the board of Cypress Semiconductor (NYSE: CY) recommending the company reorganize via a split-off of its controlling stake in SunPower (Nasdaq: SPWR) and subsequent going-private LBO transaction of the core semiconductor business. More at 13D Tracker

Private Equity Firms Looking at Alltel (AT) - WSJ

According to reports from the Wall Street Journal, private equity firms are looking at Alltel Corp (NYSE: AT) as a possible takeover target. According to the report, the balance-sheet strength would give buyers room to load up debt. The size of the deal would be large - with the currently market value of Alltel at $21.7 billion.

A potential strategic buyer for Alltel could be Verizon Wireless, a joint venture of Verizon Communications Inc. (NYSE: VZ) and Vodafone Group PLC (NYSE: VOD). Link to Article $

Reports Willis Group (WSH) Still Interested in Buying Marsh & Mclennan (MMC)

According to reports from the New York Times, Willis Group Holdings Ltd. (NYSE: WSH) is still interested in acquiring larger rival Marsh & Mclennan Companies Inc. (NYSE: MMC). The article notes that even though Marsh & Mclennan said it is not interested in a takeover, Willis Group's CEO Joseph Plumeri has not given up on his plan for a merger of the two companies. Sources briefed on the plan say Plumeri has the backing of Kohlberg Kravis Roberts (KKR), the buyout firm which briefly owned the company.

Bisys (BSG) Considering a Management-Led Buyout - FT.com

According to reports from FT.com, Bisys (NYSE: BSG) is considering a management-led buyout and has hired Bear Stearns to evaluate strategic options. The report noted that Bisys recently settled SEC fraud charges.

The article also noted a recent Jefferies report suggesting the best path for Bisys would be a takeover and a price of $13 or above would be justified.

Gap (GPS) Higher on More LBO Chatter

LBO chatter is swirling around Gap Inc. (NYSE: GPS) again today, driving the stock 3.9% higher. We are also hearing chatter than an activist hedge fund may be accumulating a position.
NOTE: GPS has been mentioned as a takeover target for some time, but some analysts have said a deal is unlikely.

Credit Suisse Also Mentions Advance Auto Parts (AAP) and Guitar Center (GTRC) as LBO Targets

In addition to discussing Barnes & Noble Inc. (NYSE: BKS) as a possible LBO target, Credit Suisse also mentions Guitar Center Inc. (Nasdaq: GTRC) and Advance Auto Parts Inc. (NYSE: AAP) as possible targets.

The firm said in the past Guitar Center said it would be easier to manage the business as a private company and the company has held discussions with large shareholder Sageview Capital, which is run by two ex-stars at private equity giant KKR.

The firm said Advance Auto Parts makes the most sense in the do-it-yourself auto segment.

International Coal (ICO) Denies Takeover Rumors

International Coal Group, Inc. (NYSE: ICO) announced that while it normally does not comment on rumors, and it intends to continue this policy, the Company has become aware of specific newswire reports of rumors of a management leveraged buyout. International Coal Group denies these rumors.

Hansen Natural (HANS) Higher on LBO Rumor

Hansen Natural Corp. (Nasdaq: HANS) is seeing interest today on LBO chatter.

In the past, it was rumored that partner Anheuser-Busch (NYSE: BUD) could buy the company in a strategic deal.

The stock is 3.5% higher in mid-day action on volume that has already eclipsed the 3-month average.

Citigroup Said Deere (DE) Approached by Private Equity

Citigroup analyst, David Raso, comments on meeting with Deere & Co (NYSE: DE) management: "Discussion focused mostly on potential areas for acquisitions/business build outs given hugely strong balance sheet and on the sustainability of its strongly improving Shareholder Value Add metrics. However, some interesting color included CEO answering our questions acknowledging company has been approached by private equity to buy the company though management seemed to genuinely dismiss the potential for such an event."

"As well, somewhat disappointing when it comes to accounting earnings potential over the next 24 months is when we asked mgmt about its journey to continually reduce inventory in the channel and if production could stay below retail demand, mgmt noted that's possible."

Jefferies Said Perot (PER) Is an Attractive LBO Target

In a research note this morning, Jefferies & Co said excess balance sheet cash, solid cash flow, modest capex and attractive valuation would make Perot (NYSE: PER) an attractive LBO take-out.

Analyst Joseph A. Vafi said, "While we have no reason to believe that the company is currently engaged or interested in a buyout transaction, we feel that Perot's valuation and business model are appealing to private equity players. We feel that shares of PER would fetch $20-21 in such a transaction."

Credit Suisse Sees Possible Barners and Noble (BKS) Takeover

Credit Suisse upgrades Barners and Noble (NYSE: BKS) from Underperform to Outperform citing valuation and likelihood of an LBO event.

Home Depot (HD) CEO Downplays LBO Speculation - Paper

According to reports from the Atlanta-Journal Constitution, Home Depot (NYSE: HD) CEO Bob Nardelli downplayed speculation that the company was the target of a takeover by private equity firms.

Nardelli told the paper, "somebody is probably running the number on us on any given day." He also said the media reports are, "an unfortunate distraction."

Recent reports from the New York Post suggested buyout firms Kohlberg Kravis Roberts and Texas Pacific Group have explored the possibility of a record $100 billion leveraged buyout of the home improvement giant.

Shares of Home Depot are 3.8% higher in mid-day action Friday.

Link to AJC.com article

Citigroup Analyst Comments on Novellus Systems (NVLS) Takeover Chatter

Citigroup analyst, Timothy Arcuri, comments on Novellus Systems (Nasdaq: NVLS): "While a private equity deal here can't be ruled out, necessary hurdle rates for returns remain difficult to achieve based on our work. Rather, we feel an acquisition by a peer such as Tokyo Electron - while risky - is more likely at this point and we now feel the probability of NVLS being acquired in the next 1-2Qs is at least 50%."

Arcuri continued, "While a deal would clearly move the stock higher, absent this factor, the fundamental margin story here has played out and shares are now under some pressure in core businesses such as CVD. We thus maintain Hold, $32 price target."

Home Depot (HD) Higher As LBO Talk Gains Steam

Shares of Home Depot Inc. (NYSE: HD) are 4% higher in early action as LBO speculation gains steam. A takeover of the home improvement giant would seem completely far-fetched not so long ago, but with the activity and wealth of private equity buyers, analysts now say a deal could make sense.

Recent reports from the New York Post, suggest private equity firms including KKR have held talks with investment banks about structuring the deal.

Analyst Says Affiliated Computer Services (ACS) News Could Bring Up Going Private Talk Again

Stifel Nicolaus comments on Affiliated Computer Services (NYSE: ACS) following news that an option investigation determined that prior CEO Jeff Rich, CFO Warren Edwards, and CEO Mark King all engaged in backdating. King and Edwards announced their resignations related to the news.

Analyst George A. Price said, "Last year, private equity pursued ACS to go private, though ultimately the company chose not to pursue that path. With the senior management changes, we believe the question of going private may arise again. Two items to note: 1) Chairman has super voting rights, controlling about 40% of the voting control of the shares (we estimate) " he would have to be open to the idea to go private, and 2) business has changed - the operating margins declined 150-200 bps, capital intensity has increased (more ITO in the mix). ACS might not be as attractive to private equity firms as it was last year (lower price than the $62 price discussed last year)."

The firm maintained their Hold rating on the stock, citing declining margins, low organic revenue growth, and high debt load.

BJ's Wholesale Club Inc. (BJ) is higher on LBO speculation after CEO resigns

BJ's Wholesale Club Inc. (NYSE: BJ) is higher on LBO speculation after CEO resigns.