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7/12/10 Midevening Report: Hefner bid titilates Playboy stock, shares bust out

|Includes:AON, BP, Alphabet Inc. (GOOG), MSFT, NLS, PLA

There was little news in the market today as investors waited for AA's earnings tonight as a signal of things to come as everyone knows aluminum production is what really drives the economy (and yes that was sarcasm).  Without much macro news other than shit continuing to get worse with temporary census jobs ending, republicans filibustering extended unemployment benefits to further punish the people who likely had little to do with the recession (other than likely borrowing way beyond their means), and no new actresses coming out as bisexual this week, we were left with a flurry of M&A driving the market (as opposed to a flurry of T&A, which likely would have led to a strong rise).

The biggest M&A deal occured between two companies about whom no one gives a fuck, as AON is purchasing Hewitt for $4.9B in cash, stock, and old actuarial tables signed by Elizur Wright.  While AON will be in flux for a bit, they should be able to immediately make use of Hewitt's human resource and outsourcing capabilities to fire the appropriate amount of people while making sure that everyone gets a smiley face cupcake.  Once done, they can further get value out of Hewitt's consulting business by leveraging them for a business case to try figure out why the hell anyone would have paid a 41% premium of 7.5x forward EBITDA for Hewitt.  Of course using their now fully owned Hewitt for that study would either be considered a virtuous circle, a vicious circle, or the least fun daisy chain since full bush was still in style.

In other M&A news, Hugh Hefner wants to take Playboy private (after years of taking it to his privates) at a 40% premium to current price, or about what he pays to the Shannon sisters.  Playboy magazine sales were down 48% in Q1 as the business continues to struggle with the invention of a little something called the internet where people can now read the hard hitting and biting journalism Playboy offers for free.  The company has gone through a major facelift over the past year by laying off staff, streamlining functions, and putting out bigger and more well-rounded (and very NSFW) articles.  The fact is, Playboy still has a recognizable and aspirational (as well as ass-pirational) brand and now that Hefner is opening up his robe for the company, there appear to be multiple bidders including PE firms, top competitor Friend Finder, and the creepy guy in the airport gift shop.  The company is definitely at a tipping point with the internet producing more free porn per minute than David Duchovny can view, but in the right hands, and with a stroke of luck, the brand could come strongly back. 

In other M&A news, BP may be selling assets in order to pay for a new Gulf.  The company is said to be in negotiations with Apache to divest $18B worth of some of the largest Alaskan assets in the world.  Finally, JNJ is buying MEND, a company that makes a device for treating brain aneurysms in stroke victims just in time to catch the growing popularity of the KFC Double Down.

Internationally, the European Commission came out with a reform package to boost consumer confiidence from "holy fuck we're screwed" to "at least we're not Kazakhstan."  The package includes EU-wide measures to protect bank account holders by guaranteeing savings...READ MORE...

Disclosure: Long GOOG