Jim Cramer's Mad Money Review

It was a brutal day on Wall Street. The fall of Lehman Brothers, Merrill Lynch and American International Group demonstrated once again the need for market transparency and the height of CEO arrogance and denial. Cramer singled out Richard Fuld, Lehman's CEO, who, he said, passed up opportunity after opportunity to save his company. He said Fuld hurt his company by being so self-absorbed, self-interested and so sure of his company's future. For his failings, Cramer removed Fuld from his Wall of Shame, noting the CEO wasn't being removed because he was ousted but because he drove his company to bankruptcy. By contrast, Cramer had kinder words for John Thain, Merrill Lynch's CEO. He said Thain did the most he could for his company, which has agreed to be purchased by Bank of America. Cramer said he had urged AIG to take action but said his advice fell on deaf ears. He said Robert Willumstad, the company's CEO, made the mistake of keeping silent on AIG's mortgage exposure and shunned the opportunity to sell when he had the chance. Cramer said the Securities and Exchange Commission complicated matters by not pushing for greater transparency as it did when it dealt with E-Trade's problems. Cramer called today's historic market collapse a disgraceful period in laissez-faire capitalism that was marked by poor government oversight.
Source: SeekingAlpha

Labels: AIG, American International Group, Jim Cramer, LEH, Lehman Brothers, Mad Money, MER, Merrill Lynch

Cramer isn't sure that all financial stocks are sells right now. "Nat City (NCC) yields 9%. ... Don't overlook the fundamentals."
"My temptation is to say everybody's going to sell," Cramer added. "Maybe you have a tradable rally in the largest stocks in the world, because everyone is going to sell. ... with these stocks where they are right now ... it's probably worth it to take a stand on these."
Cramer said things may be "good, not bad," for the financials. He pointed out that with CEO John Stumpf, whom Cramer believes in, Wells Fargo (WFC) should recover well.
Cramer also reaffirmed his support for new Merrill Lynch (MER) CEO John Thain, calling him the "man to watch at Merrill." Cramer said he was excited to see that Thain brought back Jeffrey Kronthal, who was ousted from Merrill in 2006 "because he didn't want to do a lot of subprime."

Labels: Jim Cramer, MER, NCC, Stop Trading, WFC

The Fed's creation of a temporary term auction facility to help ease the pain felt in the credit markets was "just another stupid thing that they did," Jim Cramer said on CNBC's "Stop Trading!" segment Wednesday.
"The proof is in the pudding," Cramer said. "What's the group that acts the worst today? The group that this is was meant for!" He noted that although Apple (AAPL), Chevron (CVX), Exxon Mobil (XOM) and Google (GOOG) responded well to the market, the financial sector was performing poorly on the news.
"They should have changed the statements to 50 basis points - merry Christmas, do your best," Cramer said. Instead, "Their amount of action ... a day's worth of Washington Mutual's (WM) problems."
Cramer suggested that the Federal Reserve members resign. "You are running some kind of offense that no one understands. ... These guys are really jokers." He cited the Fed's lack of experience in the markets as the source of their ineptitude. "They never sat on the desk," he said. "Go sit on a desk at Merrill Lynch (MER)."
Published By TheStreet.com

Labels: AAPL, CVX, GOOG, Jim Cramer, MER, Stop Trading, WM, XOM

Trish Regan started the show by stating that financials are up today, leading stocks to trade higher. The DOW is down about 5.3% for November. Nasdaq down 7.4% for November. Stocks are on pace for first 2 day winning streak this month. Next, the economy was discussed with Steve Liesman. He says the FED needs to take into account the market, despite dips in the credit institutions; flexible policymaking is required when dealing with volatility within the financial sector. AIG, American Express and IBM are the leaders in the financial sector today. Crude Oil reaches a two week low with a drop of almost 3%; at under $92/barrel. Freddie Mac and CITI Group are among the leaders for finances. The U.S currency index is up almost a point. Next, shareholders vs. the sec; Dan Pedrotty says that the sec is not following through to protect investors. Among these proxy proposals is the stipulation that shareholders, owning 5% or more of the company, can elect new company directors. The objective is to provide opportunities for involvement among the shareholders. Merrill Lynch is expected to have a good day. Next was the real estate market. Steve Liesman of CNBC says mortgage and interest rates are very tight. The mortgage lenders are demanding high equity loans, and those consumers who are aggressive can find the money they need, in the upcoming months. Next, David Fondrie of Heartland Investors says that Cimarex Energy (XEC) and Conocophillips (COP) would be good choices for buying today. Allan Hubbard resigns from his position as economic advisor to the Bush Administration. Keith Hennessey will be replacing him. Hubbard says he is leaving so he can spend more time with his children.

Labels: AIG, Citigroup Inc., CNBC, CNBC's The Call, COP, Fed, IBM, MER, The Call, trish regan, XEC

Erin Burnett began Wednesday's show discussing NYSE CEO John Thain going to Merrill. Charlie Gasparino of CNBC says, for John, it will be a huge undertaking and may have to lay some people off in the beginning. Merrill Lynch is refusing to confirm or report on the new CEO. Dennis Kneale of CNBC says NYSE president Duncan Niederauer will also become NYSE CEO. Niederauer says that electronic stock trading without human intervention is still questionable as the best model for trade. He will be working for a model of 21st century trading in months to come. Next, Tracy Krohn of W&T Offshore (WTI) says that he and his company are focusing on the Gulf of Mexico. W&T Offshore has interests in over 2 billion acres of natural resources. 65% of W&T's reserves are developed and 55% of them are natural gas reserves. They also have 200 exploration fields in federal and state waters, and say if there is a change in the eastern seaboard drilling restrictions W&T will be prepared. Next was the weak dollar. Robert Kessler of Kessler Companies says U.S treasuries often profit when other asset classes loose value. Investors in treasuries don't have to worry about a recession. Rick Santelli of CNBC says United Airlines and Delta Airlines are discussing a possible merge. Steve Liesman of CNBC says the Federal Reserve Board will be opening up with forecasts and predictions for the upcoming year. These reports will be covering inflation, and the potential of the current economy. Robert McTeer of the National Center of Analysis says the fed hopes to improve accountability and understanding of monetary policy in televised forecasts in the future. He says the fed will make these forecasts more frequent and more transparent. The Federal Government will compile and release projections four times a year rather than two. Stop Trading with Jim Cramer was next. Jim Cramer said Duncan Niederauer will do a great job as CEO of NYSE Euronext (NYX), adding that Niederauer has learned a tremendous amount since joining the exchange several months ago. Niederauer had previously been a trader at Goldman Sachs (GS).

Labels: CNBC, Duncan Niederauer, John Thain, MER, NYSE, Street Signs, street signs recap, WTI

Merrill Lynch (MER): 'Last week Merrill had estimates cut by Golden Sachs and it's done going down. ... That's the bottom. ... I like Merril Lynch. Barrick Gold (ABX): 'Don't trade down to Northgate. Trade up to Barrick.' ValueClick (VCLK): 'My short-term and long-term outlook is the same. ... ValueClick at 24 is going to have to be acquired by someone. ... I do a triple-buy on ValueClick.' National City (NCC) Huntington (HBAN) Corning (GLW): 'Corning's got two businesses ... it's got the fiber business, which I like very much, and it's got the crystal liquid display business, which I also like very much. I'm looking for an upside surprise in Corning.' Cramer's Take – Enbridge (ENB): 'I think Enbridge is one of the great pipeline companies. ... I recommend Enbridge.' Intuitive Surgical (ISRG) Companhia Vale do Rio Doce (RIO) China Mobile (CHL)
Bearish calls:
Ruth's Chris Steak House (RUTH): ' …it's a very well-run company ... But there is nothing that is setting the table. ... I think you should sell Ruth's Chris. ... It's just nothing special.' Cree (CREE): ‘It's been way too hard to trade, way too many disappointments. ... I want you to stay away from Cree.' Brunswick (BC): 'You cannot own that stock going into a slowdown. You have to sell that stock going into a slowdown.' Northgate Minerals (NXG): 'I owned the stock. ... They crushed me, I got beaten up…' First Bancorp (FBP)
Published by SeekingAlpha

Labels: ABX, BC, CHL, CREE, ENB, FBP, GLW, HBAN, ISRG, Jim Cramer, Lightning Round, MER, NCC, NXG, RIO, RUTH, VCLK

Shares of investment banks rallied in afternoon trading Tuesday after the Federal Reserve cut its target for interest rates, offering Wall Street cheaper borrowing and the prospect of more stable credit markets.
The Fed cut the federal funds rate to 4.75 percent from 5.25 percent.
Many investors have clamored for a rate cut, believing it would lure buyers back into certain distressed markets. The instability in markets like mortgage-backed securities, junk bonds and corporate takeover finance has siphoned untold value out of the investment banks' portfolios this quarter.
Investment banking stocks have all fallen since July amid the market turmoil.
Shares of Goldman Sachs Group Inc. rose $9.37 to $197.
Shares of Bear Stearns Cos. rose $3.22 to $118.60.
Shares of Morgan Stanley rose $4.33 to $69.24.
Shares of Merrill Lynch & Co. rose $2.90 to $75.75.
Shares of Lehman Brothers Holdings Inc. rose $4.24 to $62.86.
Published by AP

Labels: BSC, Federal Reserve, GS, Investment Banks, LEH, MER, MS

Next Week's Game Plan: Coke (NYSE: KO - News), Intel (NasdaqGS: INTC - News), United Technologies (NYSE: UTX - News), Freeport McMoRan Copper & Gold (NYSE: FCX - News), Honeywell (NYSE: HON - News), Johnson Controls (NYSE: JCI - News), Caterpillar (NYSE: CAT - News), Schlumberger (NYSE: SLB - News), Merrill Lynch (NYSE: MER - News), Wells Fargo (NYSE: WFC - News), JPMorgan Chase (NYSE: JPM - News), Bank of America (NYSE: BAC - News) and Citigroup (NYSE: C - News)
Cramer expects better-than-expected earnings from the following companies, and would buy before their reports next week: KO, INTC, UTX, FCX, HON, JCI, CAT and SLB. Since banks are "on a mission to show that there is no slowdown" and are likely to raise their dividends and buy back stock, Cramer would buy MER, WFC, JPM, BAC and C prior to their earnings reports.
That 80s Show: Boeing (NYSE: BA - News), Caterpillar (NYSE: CAT - News), ConocoPhillips (NYSE: COP - News), Energizer (NYSE: ENR - News), Air Products & Chemicals (NYSE: APD - News), Apache (NYSE: APA - News), Terex (NYSE: TEX - News)
"I've discovered alchemy," declared Cramer, noting the six stocks (BA, CAT, COP, ENR, APD and APA) he has discussed this week in connection with his theory (that stocks at $80 go to $100 and then to $120) are up an average of 5.2%. On Friday, Cramer added TEX to the list, since it is around $80 and will benefit from the "wild bull market" of infrastructure and machinery. He doesn't regard CAT as a rival, since "Terex's bread and butter is in aerial work platforms" which are not produced by CAT. He is not worried about competition from Manitowoc in the crane business.
Incredibly Risky Play: GeoEye (NasdaqGM: GEOY - News)
Cramer recommended GEOY as an "incredibly risky play" which is not for IRA money, but could have a major upside. Although it is the biggest commerical satellite company, GEOY has yet to make a profit. However, Cramer thinks outsourcing demands and Google Earth might make this company profitable, not to mention its main competitor is not a publicly traded stock. According to Cramer, the stock could double on the successful commission of a new satellite. However, the date has been deferred once, and if the satellite does not go up when expected, GEOY "could get hammered." While he urges caution, Cramer says GEOY is a great speculative stock.
Mad Mail: Taser (NasdaqGS: TASR - News), Excel Maritime Carriers (NYSE: EXM - News)
Concerning Taser, Cramer says the shorts are "enfilading fire" and "the longs are winning." He changed his position on EXM, and regretted having been too bearish.

Published by SeekingAlpha

Labels: BAC, C, CAT, FCX, HON, INTC, JCI, Jim Cramer, JPM, KO, Mad Money, MER, SLB, UTX, WFC

Aruba Networks (NasdaqGM: ARUN - News): 'Blowout quarter last week ... How about we wait for a pullback, before we back up the truck... If it goes below $20, you've got to be willing to pull the trigger.'Merrill Lynch (NYSE: MER - News): ' MER is not going to have any problem going over $100.00 ... Because MER is incredibly well-run. The sub-prime problems are in the past ... That stock needs to go higher right now. Buy, buy, buy!'Level 3 Communications (NasdaqGS: LVLT - News): 'I think this stock is going to finish the year - yes, and if I may be so bold... - at between $7 and $8. So any one of these declines is just another opportunity to load the boat up with LVLT.'Wal-Mart (NYSE: WMT - News): 'I got behind WMT in the mid-$40s, and I am not backing away now at $50. It's got much more upside.'Alcoa (NYSE: AA - News): ' I think Alcoa and Alcan are going to merge... You know I think that AA is not going to be public in a year if they don't get that deal...'Alcan (NYSE: AL - News)Dominion Resources (NYSE: D - News): 'I think that one may be a better diversified utility company than yours (Targa Resources). So let's make that switch.'Research In Motion (NasdaqGS: RIMM - News): 'That has the better fundamentals (than Palm.)'Freeport-McMoRan (NYSE: FCX - News)Qualcomm (NasdaqGS: QCOM - News): 'If you want to be in a semiconductor play that has to do with cell, I will send you to QualComm.'BHP Billiton (NYSE: BHP - News) CVRD (NYSE: RIO - News): ' ... among the cheapest mineral stocks ... It's just too darn cheap, too well-run and, ever since they were able to buy the largest nickel company ... this thing wreaks of monopoly!'Barnes & Noble (NYSE: BKS - News): 'I actually like very much the Barnes & Noble quarter, and they're buying back a lot of stock.'
Bearish calls:
Target (NYSE: TGT - News): ' ... sell, sell, sell... let's take a little off the table, and go into Wal-Mart.Aluminum Corp. of China (NYSE: ACH - News) 'The Chinese market is overheated. I liked this stock initially as a dividend play. Now that it only yields 2%.'Targa Resources (NasdaqGM: NGLS - News)Palm (NasdaqGS: PALM - News): 'You got lucky. I need you out of PALM. I would rather see you in Research In Motion ... You just lucky with that Elevation bid... I want to head to the hills, PALM. Sell, sell, sell!'Scholastic (NasdaqGS: SCHL - News): 'Oh, way too inconsistent. It's really hurt a lot of people.'Tesoro (NYSE: TSO - News): 'I want you to sell that. That move has peaked. Those margins cannot be sustained ... 'Valero Energy (NYSE: VLO - News): 'I want TSO and VLO sold.'RF Micro Devices (NasdaqGS: RFMD - News): 'I am not going to bless RFMD. Not on this show. No way ... I understand the speculative desire for RFMD, but I am not going to tell you to stay with it.'
Published by SeekingAlpha

Labels: AA, ACH, AL, ARUN, BHP, BKS, D, FCX, Jim Cramer, Lightning Round, LVLT, MER, PALM, QCOM, RIMM, RIO, VLO, WMT

A Goldman Sachs analyst Monday added Merrill Lynch & Co. to its Americas Conviction Buy List, a roster of preferred stocks, saying investors are too focused on exposure to subprime mortgages and not focused enough on momentum in the investment bank's other businesses.
Goldman Sachs analyst William F. Tanona upgraded Merrill Lynch to "Buy" from "Neutral." Merrill's stock is down 17 percent since an all-time high on Jan. 18 because of "investor concerns about subprime mortgage and potential contagion to adjacent markets." Meanwhile, similar banks are down only 7 percent in that timeframe.
The sell-off is overdone, Tanona said. Investors aren't giving management enough credit for the positive momentum the company has built over the last few years, he said. He expects Merrill Lynch to beat Wall Street's expectations for first-quarter profit.
Tanona's $107 price target is 31 percent higher than the stock's close at $81.67 on the New York Stock Exchange Friday. Merrill replaced Jefferies Group Inc. on the Conviction Buy List.
Shares of Merrill Lynch rose $1.48 to $83.15 in premarket trading Monday.
Published by AP

Labels: GS, Hot Stocks, JEF, MER, NKM

Goldman Sachs (NYSE: GS - News), Bear Stearns (NYSE: BSC - News), Lehman Brothers (NYSE: LEH - News), Bear Stearns (NYSE: BSC - News), Merrill Lynch (NYSE: MER - News), Accredited Home Lenders (NasdaqGS: LEND), and IndyMac (NYSE: NDE - News)
Cramer comments that companies are jumping onto the defaulted loan bandwagon, as Bear Stearns and other brokers “are moving mortgages to distressed debt, marking them up really big and giving you a better coupon ... having sold paper on the fly of defaulted, bankrupt and criminal savings and loans, I can tell you that's a lot better than selling paper that's involving people who own homes." When Gregg Greenberg asked Cramer to rate the top brokers in light of the subprime worries, he said Goldman Sachs is #1, and added people have yet to see the good in mortgages. GS is profiting from LEH and BSC reports, and Cramer predicts the stock will go back to $250 from $200. BSC earns the #2 position because it is "much more proactive than Lehman in terms of turning the mortgage morass into something really positive." For people who want a short play, Cramer suggests MER because it is just getting into mortgages and is not proactive. Cramer says the rally in LEND and NDE was short-covering. Concerning his dirty dozen list yesterday, Cramer emphasized that he is not saying that every company deserves to be on the list. In fact, Cramer says he is more likely to be long than short some of the listed stocks.

Labels: BSC, GS, Jim Cramer, LEH, MER, NDE, Wall Street Confidential

Bullish
Gaps Down 5% or More: These are stocks that gap down by 5% or more and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that gap down by more than 5% have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
GFI Group (NasdaqGS:GFIG - News). GFIG's PowerRating is 7.
Laps Down 5% or More: These are stocks that lap down by 5% or more and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that lap down by more than 5% have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
A.C. Moore Arts & Crafts (NasdaqGS:ACMR - News). ACMR's PowerRating is 6.
5+ Consecutive Down Days: These are stocks that have closed down for five or more consecutive days and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that close down for five or more days have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
General Motors (NYSE:GM - News). GM's PowerRating is 8.
5+ Consecutive Lower Lows: These are stocks that have made a lower low for five or more consecutive days and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that make lower lows for five or more days have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
Merrill Lynch (NYSE:MER - News). MER's PowerRating is 6.
2-Period RSI Below 2: These are stocks that have a 2-period RSI reading below 2 and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving with a 2-period RSI reading below 2 have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
Home Depot (NYSE:HD - News). HD's PowerRating is 6..
Stocks Down 10% or More: These are stocks that have lost 10% or more over the past five days and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that have lost 10% or more over the past five days have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
Westlake Chemical (NYSE:WLK - News). WLK's PowerRating is 8.
Bearish
2-Period RSI Above 98: These are stocks that have a 2-period RSI reading above 98 and are trading below their 200-day moving average. Our research shows that stocks trading below their 200-day moving with a 2-period RSI reading above 98 have shown negative returns, on average, 1-day and 1-week later. Historically, these stocks have provided traders with a significant edge.
Peabody Energy (NYSE:BTU - News). BTU's PowerRating is 3.
PowerRatings are courtesy of PowerRatings.net

Labels: ACMR, BTU, GFIG, GM, HD, Hot Stocks, MER, WLK

Accredited Home Lenders (NASDAQ: LEND - News), Merrill Lynch (NYSE: MER - News) and Bear Stearns (NYSE: BSC - News): Cramer says subprime lenders are dong well now, because there are no worries over credit losses. LEND has not fallen because subprime lending is in trouble, but because MER and BSC have entered into the game: "It's a margin-shred story," remarked Cramer.
Devon (NYSE: DVN - News), Ultra Petroleum (AMEX: UPL - News), Core Labs (NYSE: CLB - News), Total (NYSE: TOT - News), BP (NYSE: BP - News) and Duke (NYSE: DUK - News): Cramer likes UPL, CLB and DVN and called Devon's recent downgrade "criminal." He added, "If Devon stays here, it wil be bought by a European major," like Total or BP. Cramer said that Duke Energy is a "nice solid utility that grows."

Labels: BP, BSC, CLB, DUK, DVN, Jim Cramer, Jim Cramer's Stop Trading, LEND, MER, TOT, UPL

China's top port builder, China Communications Construction Co. (CCCC), plans to raise up to US$2.1 billion in an IPO after setting a price range of HK$3.40-HK$4.60 per share for a December listing in Hong Kong, a source familiar with the deal said on Monday. The state-owned company, which will kick off a formal marketing roadshow on Nov. 28, is offering 3.5 billion shares at a price range representing 13 to 18 times its 2006 prospective price to earnings multiple. Texas-based Fluor Corp. (FLR.N: Quote, Profile, Research), a U.S. engineering and construction company, trades at 32 times 2006 earnings. Hong Kong's stock market, which has seen a flood of new listings this year, is also awaiting IPOs from hotel operator Shanghai Jin Jiang International Hotels, China Communications Services and China Coal Energy that could raise more than a combined US$2 billion by the end of the year. China Communications Construction's businesses range from infrastructure design and construction to dredging and port machinery manufacturing. The IPO proceeds will help it expand its business to new engines, including railway construction and heavy marine machinery manufacturing. The retail portion of its Hong Kong offering will run from Dec. 1 to Dec. 6, with final pricing on Dec. 9. A trading debut is set for Dec. 15. The company plans to earmark $240 million worth in shares to three investors, including China Life Group, New World Development (0017.HK: Quote, Profile, Research) chairman Cheng Yu-tung and Singapore's GIC Direct Investments, sources told Reuters on Friday. The offering is being sponsored by UBS (UBSN.VX: Quote, Profile, Research), Merrill Lynch (MER.N: Quote, Profile, Research) and BOC International.
CCCC had originally planned to list simultaneously in Hong Kong and Shanghai, which would make it only the second company to do so after Industrial & Commercial Bank of China (1398.HK: Quote, Profile, Research) (601398.SS: Quote, Profile, Research), but technical issues thwarted the plan. There is no clear timeline for when it will raise money in Shanghai.
Source: Reuters.com

Labels: China, Construction, FLR, Innitial public offering, Investments, MER, Stock, UBSN

Blackstone Group's $36 billion takeover of Equity Office Properties Trust (nyse: EOP - news - people ) announced on Monday underscores that the U.S. office real-estate market is strong even if housing is weak. Blackstone will acquire San Zell's Equity Office Properties Trust for about $20 billion in cash plus the assumption of $16 billion in debt. The deal is expected to close in the first quarter of 2007. (See: " Zell Cashes In On EOP Deal.") Zell formed Equity Office Properties Trust in 1976. The company now owns 580 buildings comprising about 108.6 million square feet in 16 states and the District of Columbia. Equity Office Properties Trust went public nine years ago. The company has made acquisitions valued at about $17 billion since launching its IPO. The deal looks like good news for REIT investors. "(The) transaction supports UBS' Real Estate Investment Trust thesis that current valuations seem reasonable given direct bid for real estate and relative ease of purchasing REITs at perceived discounts versus aggregating portfolios piecemeal, particularly given leverage in these types of transactions," James Feldman, an analyst at UBS Investment Research, said in a report. The deal is likely to increase interest in Boston Properties (nyse: BXP - news - people ), Vornado Realty Trust (nyse: VNO - news - people ), SI Green Realty, Maguire Properties, and Brookfield Properties (nyse: BPO - news - people ) as investors look for high-quality publicly traded REITs. "In addition, this could also spark a rally for those REITs trading at greater discounts to the group such as Highwoods Properties (nyse: HIW - news - people ) and Brandywine Realty Trust (nyse: BDN - news - people )," Feldman said. The REITs cited by the analyst posted gains Monday with Boston Properties leading the charge; the stock closed at $115.55, up $6.93, or 6.4%. Vornado also posted a healthy gain, and closed at $120.91, up $3.91, or 3.3%. Blackstone will acquire all of the outstanding common stock of Equity Office for $48.50 a share in cash. The purchase price represents an 8.5% per share premium over Equity Office's Friday closing price of $44.72 and a 20.5% premium over the company's three-month average close. "Our ultimate goal has always been to maximize shareholder value," Richard Kincaid, chief executive officer of Equity Office said in a prepared statement. "We believe we have done that through this transaction with The Blackstone Group." Vacancy rates have been dropping, driving rents up and making office buildings attractive to investors. Blackstone has been snapping up real estate investment trusts, including CarrAmerica Realty (nyse: CRE - news - people ) for $5.6 billion and Trizec Properties (nyse: TRZ - news - people ) for $4.8 billion. Equity Office has been the subject of takeover rumors for about six months. According to press reports, Zell has said that he believed Equity Office shares were undervalued. A report by Colliers International, a real estate consultant, said demand for prime office space remains strong, especially in major cities. In New York, the vacancy rate for Class A office buildings recently fell to 6.9% in mid-town Manhattan -- the first time vacancies fell below 7% since July 2001. Rents have climbed to $59.64 per square foot, up 3.7% from a year ago. Strong demand means tenants will pay higher prices, generating solid returns for investors. Including assumed debt, the value of the deal surpasses the July take over of HCA (nyse: HCA - news - people ), the largest U.S. hospital company, by Bain Capital, Kohlberg Kravis Roberts, Merrill Lynch (nyse: MER - news - people ) and HCA co-founder Thomas Frist Jr. in July for $33 billion and KKR's takeover of RJR Nabisco for $31.3 billion in 1989.
Source: Forbes.com

Labels: BDN, Blackstone, BPO, buyout, BXP, CRE, HCA, HIW, MER, REIT, TRZ, VNO, Zell