$$$ Bear Stearns Sending Redundancy Letters [Reuters via NYT]

$$$ Thain's plans to go from MER-->GS2 proceeding nicely. [Bloomberg]

$$$ The Five ForcesCircles of Hell [GP]

$$$ Tips On Street Fighting from Yale Fantasist Aleksey Vayner [Gawker]

$$$ Still sticking to our pledge to not make fun of charity but, man, this hurts. [TimSykes]

We're told that the 150 employees BP just laid off will receive, at a minimum, six months severance.

ABC News reports that Cerberus Capital Management is in talks to invest $200 million for a stake in Blackwater. We originally suspected that this was merely a PR move by Feinberg's firm to really try and live up to its three-headed dog guarding the gates of hell name but when even Tonton Macoutes-employing Steve Cohen is chastising himself for not coming up with the idea, you have to wonder, perhaps Cerberus is on to something? In related news, the Hebrew Rambo, Daniel Loeb, has been heard shouting, "Whoa, why the hell didn't I think of this!? Major firearms manufacturers AND the staff to buy them? Total vertical integration and complete dominance in the AR-15/M-16 market with no threat of anti-trust because I'm only dominating one class of firearms! Fuck me, that Feinberg is good."

As an aside: Iraqi Army to Ditch AK-47s for M-16s [Military.com]
Hedge Fund in Talks to Buy Blackwater [ABC News]

UPDATE: Or not! Quick DL, now's your chance! Do it before Steve! Run, Jewboy, run!

CNBC’s Senior Testes-cum-Ovaries Correspondent Charlie Gasparino reports that the Federal Equal Employment Opportunity Commission has closed its investigation of allegations made by a former SAC Capital employee that his superior forced him to take female hormone pills. Junior trader Andrew Tong filed a discrimination lawsuit last year, charging that his boss, Ping Jiang, whose trading philosophy states that men must be more like women, sexually harassed him and made him take estrogen, which supposedly caused strain on Tong's marriage, and led to him wearing dresses. On Monday EEOC stated that after interviewing dozens of SAC employees, all of which claimed to be wearing tube tops and mini skirts "of our own volition," that it would not proceed any further. Though Steve Cohen et al are probably pretty pleased with the decision, we hear that Ping is sort of torn-- on the one hand, he's happy that Tong, whose lawsuit continues, has been stripped of a powerful ally. On the other, having been recently tossed aside by the hedge fund for merely not making them any money this year, he'd loved to see those "sexist pigs" fry. If he has go down with them, so be it.

EEOC Closes SAC Capital Female Sex Hormone Case [CNBC]

My darlings, you are in for a treat. I just got off the phone with Carney, who called moments after the Fed's 25 basis point cut announcement. Now, we won't be forced to slog through a piss poor attempt on my part to replicate the post-decision congratulatory remarks we've all come to know, love and expect from our fearless leader. Instead, please find a statement from the thoroughbred's mouth, which I lovingly transcribed, after the jump.

Home prices in the Hamptons, where rich and famous New Yorkers spend summers by the sea, fell in the first quarter as Wall Street job cuts and an economic slowdown took a toll on buyers.

The median price declined 7.1 percent to $882,500 and the number of sales dipped 29 percent from the last three months of 2007, according to a survey by appraisal firm Miller Samuel Inc. for New York-based Prudential Douglas Elliman Real Estate. Part- time Hamptons residents include Lazard Ltd. Chief Executive Officer Bruce Wasserstein and comedian Jerry Seinfeld.

Or you could take the advice of a sub-prime guru I know. Just wait until next year and buy it cheaper still.

Hamptons Home Prices Decline on Wall Street Job Cuts, Economy [Bloomberg]

BP has supposedly relieved about 150 employees ("Front office, some traders included") of their duties. No word on severance.

Non-consultant consultants, non-existent former executives, non-departure departures. I give you...GLG Partners. The London-based hedge fund, whose "star" emerging markets fund manager, Greg Coffey, resigned and then took back his resignation and then resigned again all in one week's time, has lost three more employees from its senior asset management team. Following in Coffey's footsteps are Michael O'Connor, who traded Asian debt, equity, and convertible bonds, Udo Herschel, who worked on capital structure arbitrage, and Ben Gill, who was with the company for six years and who was most recently a global macro fund manager. Don't take the mass exodus to mean anything, though, says GLG. The fund assured boutique shop Ladenburg Thalmann, which published a note about the surrealistic laugh factory this morning, that they're really NBD. Sayeth LT:

"...management has informed us that one of these individuals had been dismissed several months ago and one individual was a consultant on the payroll and will remain a consultant, but not on the payroll. The status of the third individual is not clear as he is seeking to address some personal issues. We do not have basis to believe that there is some sort of exodus occurring at GLG."

So, really, everyone should just chill. Also, don't worry about the fact that GLG has delayed its shareholder meeting a month, now rescheduled to take place in early June. There's a logical explanation for that which doesn't have anything to do with the hedge fund going down-- CEO Noam Gottesman, who, of former employee Philippe Jabre, told Bloomberg last year, "As far as I'm concerned, he doesn't exist," needs a few extra weeks to put the finishing touches on a power point presentation called "Former Individuals Under My Employ Who Are Now Dead To Me, Which Belies The Fact That THEY NEVER EXISTED IN THE FIRST PLACE. WHO DIDN'T EXIST IN THE FIRST PLACE? EXACTLY." Sources tell DealBreaker he's also still searching for a sufficiently regal-looking pointer with which to draw the audience's attention to a larger than life projection of O'Connor's head while noting, "Exhibit A," and then, with great flourish, hitting delete.

More Executives Exit GLG Partners [Financial News]

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No surprise that, having won Wendy's, Nelson plans to let the blades fly in today's 13D/A filing. Still... ouch.

Agreement and Plan of Merger ----------------------------

On April 23, 2008, Triarc, Wendy's International, Inc. ("Wendy's") and a wholly-owned subsidiary of Triarc ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement"). The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into Wendy's, with Wendy's as the surviving corporation (the "Merger") and as a result of the Merger, Wendy's will become a wholly-owned subsidiary of Triarc. Pursuant to the Merger Agreement, each outstanding share of common stock of Wendy's will be converted into 4.25 shares of fully paid and non-assessable shares of Class A Common Stock (the "Merger Consideration").

Just in case you missed it, we ran a reader poll yesterday to predict what the Fed will do at 2:15, in memoriam of our fearless leader, Bon Quarney. Lon loved breaking out his crystal ball on such occasions (and what visions! Don't get me started reminiscing...), and while the DealBreaker Fed Poll was his baby, we know Don would've wanted us to carry on with pomp and circumstance in his absence. In endeavoring to replicate that which was Mon's market moving insight to a T, we now ask that you answer the same question a second time. So drop what you're doing and start prognosticating. Last chance to get in. Be part of something historic. The free world's fate hangs in the balance. And I do not mean that in jest-- even though the poll asks "What will the Fed do?" which is to say, "Let's predict what the Fed will do," DealBreaker Readers (capitalized to emphasize how important you are) know that we're actually telling the Fed what to do. Deciding for them. They're actually sitting there waiting for our poll to close. So take this thing seriously, and when you cast your ballot, realize that it's not just a poll-- it's Klarney whispering in Bernanke's ear.

For the bargain basement price of $400.00 you can read Standard & Poor's thinly veiled mea culpa and distill from their "super new not old at all" methodology that Junior "AAA" tranches of defaulted, mortgage backed CDOs will recover about $0.35 and Senior "AAA" $0.60. Your tranche is rated "A"? Punt.

Criteria: Recovery Assumptions Revised For Certain CDOs Backed Predominantly By U.S. RMBS [Alacra Store]

GM Reports Preliminary First Quarter 2008 Financial Results
What, did GM become a Wall St. bank? The company lost $3.3 billion in the quarter, related to various things including GMAC stuff and a strike at American Axle. The good news: on an adjusted basis, it only lost $350 million, which is at least believable. If they'd reported an adjusted profit -- as these companies are sometimes prone to do -- we wouldn't be buying it. The automaker also reduced its units sold forecast in light of the economy.

Shortages Threaten Farmers’ Key Tool: Fertilizer (NYT)
All of the sudden, fertilizer is hot hot hot? What was it that Cramer said the other day? He said Monsanto was the new biotech stock (or something like that) and that fertilizer players were the new Pfizer or some such -- basically fixing the issue, but not curing it. Is the fertilizer shortage a big problem? We have no informed opinion other than to say that eventually this endless cycle of shortages (grain, land, water, energy etc.) will probably snap at some point in some way.

Fed expected to cut key interest rates one more time (AP)
Has anyone one made a "hit me Bernanke one more time" joke before? Surely. But anyway, the markets are expecting one more cheap hit of cheap money and Bernanke is, in all likelihood, going to deliver. Why can't he be firm and just say no? Who knows, but he just won't. If you're a hawk, the good news is: this may be the last one. Right.

Microsoft's Next Move on Yahoo is Imminent (WSJ)
The report says Microsoft's next "move" is imminent, though it really sounds like a non-move more than anything else. Rather than decide what it wants to do (go hostile or walk), Microsoft is expected to do a time-buyer, nominate a slate of its own directors, but not really bring a case to shareholders. Good: more delay.

$$$ Citi knocks another one out of the park. [WSJ]

$$$ Pilgrimage, Part VII: “You Don’t Want to Let Him Down” [JeffMatthews]

$$$ V [WallStrip]

Presented without comment:

The Bank of England has imposed a permanent news blackout on its £50bn-plus plan to ease the credit crunch.

[...]

Requests under the Freedom of Information Act are to be denied. Details will be kept secret even after 30 years - the period after which all but the most sensitive state documents are released.

Any Bank of England employee leaking the names of institutions involved will face court action for breach of contract.

(Oh, ok, one comment: How the hell do you meet a reporting requirement if you can't disclose your sudden 3 billion GBP liquidity injection?)

Bank Bail-Outs To Be Kept Secret [This Is Money via Typically Clever DB Commentary]

A few readers have noted that the wheels are coming off here in the absence of our fearless leader, Ron Blarney, and his capacious intellect and market moving insight. While I could never hope to bring the same gravitas that he has demonstrated in his coverage of the rice market, I will now endeavor to honor the memory of Lon Varney, via his famed ‘What Will The Fed Do?’ poll. Bon always took such pride in the predictive prowess of the DealBreaker Fed Poll, and while it is indelibly linked to him and him only, I know he would’ve wanted us to carry it on in his absence. And, I bet you his annual take home (2 large) that he’s looking down on us and smiling. To those of you who think I am the local yokel—btw, how dare you—and that it is sacrilegious of me to attempt to climb on the shoulders of a giant, please realize that I approach this subject with the greatest humility, and self-awareness that I could never come close to Don Klarney’s level of magisterial prognostication.

Facts:

The Strategic Petroleum Reserve has a capacity of 727 million barrels.

As of April, 700 million barrels were held in the reserve. This should leave 27 million barrels left to fill.

Early this year the Bush Administration indicated it wants to have the reserve full by September. Assuming this is a 7 month effort, that's a rate of about 3.8 million barrels per month or around 128,000 per day. (This is "paid for" by producers who pay their taxes with oil rather than cash).

At best, just because of practical considerations, the reserve can pull out 4 million barrels per day.

Halting additions to the reserve and opening the spigot as wide as it goes will produce a "supply increase" of around 4.2 million barrels per day.

Daily consumption of oil in the United States: 20+ million barrels per day.

Short run demand elasticity of oil vis-a-vis gasoline price: 0.08 - 0.10.

Question 1: What are we to make of this assertion in the Wall Street Journal:

"We are in an extreme circumstance," the senators wrote. "I support an immediate halt in the deposits of domestic crude into the SPR as we enter the busiest driving season of the year."

The letter comes one day after a group of truckers and other citizens arrived at the Capitol asking the government to intervene as prices keep rising. With the average price of gasoline at the pump reaching a record $3.60 a gallon last week, according to government data, truckers and people who get to work by car are struggling.

Question 2: What is the likely impact on gasoline prices of: (a) A halt in additions to the SPR? (b) Opening the spigot as wide as it goes?

Extra credit question: Who finds these people who end up in Congress?

When I was a little girl, my father told me a bedtime story. It seems that after the destruction of the VFK ball-bearing plant in Schweinfurt in 1943, when Germany suffered severe shortages of ball-bearings (a critical war making commodity), a huge storm washed up a large freighter filled with high-quality Swedish ball-bearings. The Swedes made the best, it seems, and their neutrality allowed them to trade with Germany- and hold out war-time prices for their goods.

Excited, the Germans immediately seized the bearings and sent them to various factories supplying the German war machine. So significant was the find, the Captain who's unit discovered the cache was decorated by Hitler personally. Of course, this was all a clever ruse. Some clever OSS agent had thrown together the plan as a follow-up to the Schweinfurt raid to cause a massive shipment of subtly imbalanced bearings to be beached on German controlled shores. The impact on post 1943 equipment should be predictable for anyone who knows even a little about engineering. Modern examples of what amount to economic warfare are equally entertaining. So tell me that the CIA is not behind the massive influx of the modern, cultural equivalent of imbalanced ball-bearings to Iran. That would be, of course, Barbie.

"The irregular importation of such toys, which unfortunately arrive through unofficial sources and smuggling, is destructive culturally and a social danger," according to Prosecutor General Ghorban Ali Dori Najafabadi of Iran. "Undoubtedly, the personality and identity of the new generation and our children, as a result of unrestricted importation of toys, has been put at risk and caused irreparable damages."

Well, I suppose that depends on the generation of Barbie that has been sent to Iran. Was it realistic-body-type multi-cultural Barbie? Or was it 1987 Barbie? If the former, then the Mullahs are, to put it mildly, fucked.

According to CNN, this is not a new crisis, and Iran has launched more than one cultural counter-offensive over the years.

Also in 2002, Iran introduced its own competing dolls -- the twins Dara and Sara -- who were designed to promote traditional values with their modest clothing and pro-family stories. But the dolls proved unable to stem the Barbie tide.

Imagine that.

Now if only they had made Ken anatomically correct. Or, perhaps, even a bit augmented.

I love free trade.

Iranian Official Calls Barbie "Destructive" [CNN]

Here’s a lil’ pick me up for all you bankers thinking you’re the only ones taking it up the tailpipe-- JWM Partners, the fund started by John Meriwether after things started to go downhill at LTCM, which recently lost 24 percent in its $1 billion fixed-income hedge fund this year through March 14, just laid off ten employees and two partners have “quit.” DealBreaker has obtained a portion of the heartfelt note Meriwether sent to the unlucky staffers, which you’ll find after the jump.

What do you do when your private equity returns are dwindling because you have billions of idle cash sitting around and no deals to invest in? Invest in public equities, of course. Well, "of course," is sort of strong, particularly when your core competency isn't public equity analysis.

Believe it or not, public equity analysis as a preamble to non-control investments in publicly held firms is a much different and more difficult, different endeavor than LBO analysis. Going to the second-string of private equities because your offering memorandum is quite broad and because your traditional 30% returns are being degraded by the amount of cash you've left sitting around doesn't really inspire much confidence. Ask Blackstone, for instance, what they think of their Deutsche Telekom investment, picked up two years ago at $17.27 (a premium to the stock price at the time- which makes it an interesting PIPE deal). Today DT's ADRs are floating around $17.90- and something like 25% of that value is underpinned by the Dollar's sad exchange rate against the Euro. On pure equity analysis, Blackstone would be looking at a 25% loss over two years. Well, unless some genius over there actually figured on the sad prospects for the dollar and planned carefully for a basically break-even investment after two years. Ouch.

I would say I'd be selling my Blackstone shares, if I owned any. I'd say short Blackstone, but, well, it's probably a bit late for that.

Schwarzman, Kravis Cash Pile Grows With Risk of Reduced Returns [Bloomberg]

How do you pull a bunch of LBO commitments off of your balance sheet? Sell them to the borrowers, and finance the transaction. How does that pull the debt off your balance sheet? Denial, my friends, ain't just a river in Egypt.

Citigroup sold $8 billion of the debt to private-equity firms this month only after giving buyers $6 billion of financing at cheaper rates than it can borrow itself, according to people familiar with the transaction, who declined to be identified because the terms aren't public. Deutsche Bank AG and Royal Bank of Scotland Plc are also offering credit to buyers to help cut their holdings. (Emphasis mine).

[...]

Banks escaped about $65 billion of LBO commitments in the past four months in part by lending money to private equity firms such Blackstone Group LP's GSO Capital Partners and Apollo Management Inc. Wall Street is getting rid of the debt individually, in packages or placing it into structures such as collateralized loan obligations, which pool loans and slice them into pieces with various ratings to sell to investors.

"They're substituting one credit for another but they're still ultimately on the hook for the debt,'' said Robert Willens, a former managing director Lehman Brothers Holdings Inc. who runs a tax-advisory firm in New York.

The rest of the inventory was reduced because acquisitions such as Blackstone's $6.6 billion of Dallas-based credit card processor Alliance Data Systems Corp. were canceled, eliminating the bank commitments.

By offering to finance the sales, banks can receive higher prices for the loans.

Now maybe it's just me, but providing loans at rates lower than your own cost of capital to firms to buy your loans sounds, shall we say, uniquely Wall Street. Then again, perhaps the increased price financed debt purchases commanded made up the difference. If nothing else, this is an interesting data point for how desperate banks are to shed the debt, and what effects fire sales have on price (i.e. very and brutal).

UPDATE: One DB tipster indicates that some loan financing deals (that sounds funny, doesn't it) are leveraged up to 10:1. Ouch.

Pandit's `Closer to End' Means No Escaping LBO Loans [Bloomberg]

DealBreaker's exclusive "SC 13D" alert again pays dividends on the 15 minutes we spent setting it up. Today we discover that HBK investments, you might remember them from not-so-distant accusations of "abusive and improper" short selling in the private investment in public equity (PIPE) markets, or just because they manage around $14 billion, is throwing its weight (about 9.1% of Circuit City's common stock as well as 8% and 5% of Class A and Class B common respectively) behind the deal, going so far as to indicate that HBK "might also be prepared to provide financing for such a transaction." And why not? According to their 13G they picked up their initial stake last summer. Doubtless, a transaction would be help soothe the bath they've thusfar taken (the stock was floating around $12-$14 last summer). Now they've gone active. To wit:

Panel to Look at Foreclosure Practices (NYT)
A Senate panel will look at whether banks are exacerbating the foreclosure crisis by adding all kinds of fees and stuff for borrowers that are already struggling. The efficient markets believer in us finds this hard to believe -- that banks would do stuff to make foreclosures more likely. But on the other hand, if you know you're about to lose a borrower in the next month or two, maybe you would try to squeeze as much juice out of the lemon as you can. Good thing the Senate will get a definitive answer for us on this.

Calpers Chief To Step Down In Latest Exit (WSJ)
Time to make some real cash. CEO of Calpers Fred Buenrostro has decided to step down, and will likely pursue opportunities in the private sectors. Buenrostro had been at Calpers since 2002, and he says he has a good succession plan already in place, so nothing to worry about. Just a few days ago, the CIO of Calpers said he would leave to launch his own green fund (its California after all).

No Break in the Standoff of Microsoft and Yahoo (NYT)
Still no sign of action from either side, and still no talking -- at least according every single published report we've seen anywhere. If Microsoft and Yahoo are having secret talks, they're doing a damned good job of hiding it.

Deutsche Bank reports 1Q loss on $4.2 billion in write-downs (AP)
Another $4.2 billion, but only a $220 million quarterly loss for Deutsche Bank, so the writedown wasn't totally out of proportion with the rest of the quarter. Basically, they did worse than break even, but no losses into the billions. That's a victory. Also, worth noting that Deutsche Bank had telegraphed this result, so no real surprise either way.

$$$ Deals: The Feeling's Mutual, and Beefy
In our M&A Roundup for the week ended April 27, Liberty's Safeco purchase and that Wendy's-Arby's combo help lift overall values. [CFO.com]

$$$ Rubenstein Sucks! [Talking Biz News]

$$$ Headhunters: Friend Or Foe? [Mergers and Inquisitions]

THE TIM SYKES STORY

Mon., April 28

5:45 p.m.

3M Auditorium, University Of Minnesota, Carlson School of Management

Timothy Sykes, author and former hedge fund manager was made famous by turning $12,000 in bar mitzvah money to over $1.65 million in just four years by trading penny stocks. Trader’s Monthly magazine named Sykes to their ‘Top 30 under 30′, a list recognizing the top 30 investment professionals under the age of 30. Tim Sykes will present his investing strategies and a forum of faculty members will critique his ideas and determine whether his strategy deserves merit or whether his success is the result of luck. Free dinner provided by Chipotle.

Those who’ve been paying attention will recall that we love us some Vikram Pandit. He, of that happy, gay, elfin visage; he, of that infectiously intoxicating laughter/unbridled joy even in the face of phenomenal failure; he of that smile that can only say “Christmas in Bombay.” We love him so much that we bought into Citi’s new slogan “Make Vik Smile,” and picked up 400 shares of Citi the same day the company announced its latest trillion dollar writedown. So this, Takeaway # 2 from the NYM article, was particularly hard to take:

A longtime Mack associate, recruitment manager Jerry Wood, said that if Mack made Cruz the next CEO, their old colleague Vikram Pandit, who by then was running the institutional clients division at Citigroup, would raid the company for disgruntled Cruz antagonists. “Vikram has a paycheck in one hand and a voodoo doll of Zoe in the other, and we’re going to lose all these people if they think the future is Zoe Cruz,” he said, according to two people familiar with the conversation.

No, god damn it, no! Vikram isn’t supposed to be an evil, conniving, backstabber. He’s not even supposed to be a shrewd businessman. He’s supposed to be Lil’ Vik, of infectious good cheer, even when there’s nothing to be cheerful about! Since we cannot deal with any evidence to the contrary, we’re going to retreat to our crying room until somebody scrubs the internet (and our consciousness) of this b.s. But first, we’re going to do this.

New York Magazine has a very good article about Zoe Cruz, the Morgan Stanley co-president who involuntarily resigned last November because (pick one) a. (In some people’s estimation) she was to blame for the company losing a few billion dollars b. A lot of people disliked her and told Mack they would leave if he made Cruz CEO c. Mack had to blame either himself or Cruz for some losses and he chose her. d. She was, you know, a girl, and the boys didn’t like that. But it’s extremely long so we’re going to highlight the takeaways in several installments.

Take away #1:

At one time or another, Morgan Stanley employed at least a handful of tools who found this funny:

It shouldn’t really come as a shock that News Corp-owned Fox Business would encourage its employees to get all MySpacey on the corporate blog but hi-yo, Alexis Glick! The FBN anchor recently spent four days on vacation with her husband in London and posted about the trip this morning. You think you’re reading an interminably long and boring entry about two tourists going to football games, taking pictures of Buckingham Palace and using the word 'bloody' and then at the last second, the Glickster slips in an insinuation that those to had sex!

Round of applause for John Thain and the enormous restraint he demonstrated in the five months since taking over Merrill Lynch. He could’ve changed the letterhead, shaved his head and asked people to call him LB from Day One, but he resisted, pandered to the “culture of Mother Merrill,” and even ingratiated himself to the team with a few slipups reminiscent of their former CEO, just to make everyone feel at home. Ultimately, though, the temptation to make the firm “not so much Merrill as Goldman” proved too strong. He would’ve had to have the strength of a pro-wrestler/master beekeeper to hold out much longer, and as you well know, Thain is merely a former high school wrestler, and though very passionate about honey, amateur beekeeper at best. So the statement from MER today that JT has hired former GS colleague Thomas Montag to head trading worldwide should come not come as a shock, nor should the whispers (in our head) that he’s rallying hard to bring in erstwhile Goldman Sachs CEO Jon Corzine in some sort of capacity. Though, according to the rumors, the would be hire has less to do with turning Merrill into Goldman than Thain attempting to assuage his guilt about ousting his mentor back in the day, and also to bring Wall Street’s greatest bear hugs back into his life, via payroll. Additionally, DealBreaker has obtained an internal memo sent out to senior management this morning entitled “Drop Everything: Things We Must Do to Become More like Goldman”

We went on record the other day saying that we try and stay away from making fun of charitable donations of any kind. And, damn it, UBS woman who boxed us into the corner, we’re sticking to it. Just know that we’re grappling with a banging our head against the desk level of frustration here, k? K. Former Bear Stearns chairman and chief executive Alan “Ace” Greenberg announced that he will be gifting twenty five longtime workers of the late firm with $360,000 of his own money. Once a month, for the next six years, the former employees will receive $200 each.

Gift to the Mailroom, From the Boardroom [NYT]

Mars, Buffett Team Up in Wrigley Bid (WSJ)
Next weekend's Berkshire Hathaway annual shareholder meeting is gonna be sweet (rimshot)! Word is that the company is going to team up with Mars to buy out Wrigley, really putting a strangleholde on the candy industry. The value for the deal is pegged at $22 billion. Exact terms are unclear. BRK may provided Mars with the financing to do the deal and then become a major Mars shareholder. But, given all the talk about how the chocolate makers may or may not have an oligopoly, probably smart for some other end sellers to find strength in numbers.

Continental Airlines Chooses Not to Merge
Forget what ya heard. Continental does not plan to merge with another airline. Some reports over the weekend suggested the carrier was in talks -- mergers are the hot thing now, after 5 or 6 airlines have gone bankrupt, and while others have agreed to tie up. But Continental specifically sent out a press release saying it all wasn't true. From a letter sent to employees (and now to shareholders): "We have significant cultural, operational and financial strengths compared to the rest of the industry, and we want to protect and enhance those strengths -- which we believe would be placed at risk in a merger with another carrier in today's environment."

Eos Airlines Crashes (PE Hub)
Oh right, speaking of bankruptcies, Eos is the latest. The company isn't doing some in-bankruptcy operation. Nope, just shutting down completely. Yesterday was its final day of flying between New York and London (Stansted). What we need is about 10 more of these, including some huge ones, and the remaining ones might actually be able to perform better. BTW, it looks as though the Eos website is down too. Who wants to pay for hosting? Nobody.

Oil Rises to Record on U.K. Pipeline Shutdown, Nigerian Attack (Bloomberg)
You might be able to make the argument that this is the most common headline of the last four years. Like really. Anyway, oil is near $120 now, so that's probably a foregone conclusion. And that means $125 is too. Even without Nigerian attacks, the trend seems to be solidly up.

$$$ Kerviel starts new job at computer consulting firm [INHT]

$$$ Investment Bankers, Know Thyself [BB]

$$$ AAPL [WallStrip]

Bear is looking for summer associates.

The streets of Chiang Mai, Thailand's second city located near the northern end of the country, are nearly empty during summer middays. Most people you encounter will be tourists, backpackers and the drivers of tuk-tuks, the three-wheeled taxis that are everywhere in South East Asia. Thais know that the midday sun--or heated haze--is to be avoided.

So where are all the Thais? A great many are at home, safely shaded and cooled by those slow-motion fans that cool residents of South East Asia but provide no relief to visitors. But those Thais who need to get out of the house--especially those with some extra disposable income--head to the mall.

Recent visits to a few of the malls in Chiang Mai suggests that hotter days drive up mall visits. It's been unseasonably warm in the last few weeks, and business is booming. If you want to profit from fear of imminent environmental doom, the mall is where to do it in Thailand.

I'm officially on vacation here in Thailand, so I haven't bothered to find out who owns the malls or the bigger Thai stores. But I did notice a few American companies with Thai mall exposure: Dairy Queen, Pizza Hut and Duncan Donuts.

So the next time you hear about the "inconvenient question" you'll have a convenience store answer: Long the DQ Blizzard!

--John Carney is trying to find ways stay cool in Thailand.

Recently laid off from your buldge bracket bank because the buyout business has dried up? Well Bangkok may be where you want to be. Beside the obvious benefits--cheap domestic help and bespoke clothing--the land of smiles may be poised for an M&A boom.

Firms here cannot use tax losses on the books of acquired companies to offset profits of the combined entity. But that may be changing thanks to a newly announced government plan to boost investment.

The tax laws now in place discourage deal making because mergers erase value by eliminating carried tax losses. The change couild unleash value now trapped inside firms, making deals much more attractive. Firms with tax losses on the books will suddenly have a valuable asset.

This is probably somehow related to rice or Buddhism but I've probably said enough on that for now.

--John Carney is "on assignment" in Thailand.

There's a deep irony to all the talk about the global food crunch (they laugh at our "credit crunch" here, you can't eat credit) portending dark deeds in Thailand. This country is hardly in danger of running out of rice, short term or long term. In fact, it supplies the international market with 30% of its rice. This eclipses many countries, such as China, that produce far more rice but have limited exposure to global markets due to export curbs. Thailand, despite the dire talk of rice price hikes, probably stands to reap huge profits from the Food Crunch.

What's more, Thailand could produce even more rice than it does. Large parts of its rice fields are underproductive, in part because they are not properly irrigated. Many fields that could produce multiple crops a year produce just one or two. Price controls and other government mucking about contribute to the low-productivity. But, if I were asked, I'd probably say an even bigger role is played by the heat here. It's really, really hot in the summer. And it's summer right now. It takes a lot of baht to motivate Thai farmers to work in the summ er. Leisure in this kind of weather is a highly prized commodity. But if prices get high enough, the farmers will dismount from the hammocks and get to planting.

So if Thailand has plenty of rice and could produce more if the price was right, what's all the fuss about? To understand the issue, you have to realize that in this part of the world rice quite literally has a religious dimension. In the mornings you can find women on the streets given rice to monks to "make merit"--which is Buddhist for scoring religious points. At images of the Buddha throughout Thailand, people leave offerings of rice. High prices are seen as interfering with the religious obligations of the people. Keeping rice prices low is a way of staying right with Buddha.

It's also pretty much part of every meal. So imagine, if you will, if $117 oil meant we had to cancel Sunday church services and Saturday bbqs. Rice, in Thailand, is food plus religion. And when it gets expensive, dangerous forces can be unleashed.

--John Carney is probably eating too much rice on his vacation in Thailand.

Thailand may have spent the Cold War on the free market side of the Bamboo Curtain but rice socialism still reigns. Price shocks have politicians scrambling to raise rice productivity through irrigation projects, while consumers are now facing new purchasing limits on rice at markets.

Consumers are limited to buying just three bags of rice at the markets. It's a form of demand side price control made necessary by the supply side price controls exercised by the government. Rice is only allowed to be sold to consumers within certain price bans, which would lead to shortages if market processes were allowed to work themselves out. To avoid market created shortages, the government has decided to preemptively create its own shortages by limiting purchases by consumers.

The next move may be for the Commerce Ministry to release its Strategic Rice Reserves. No really. The government hordes rice in case of shortages here, the way the US government hordes oil. But this possibility may actually lead to further shortages in the long run, as rice farmers may plant fewer crops for fear of downward price pressure from government reserves being released.

All of this is feeding into rumors of a possible military coup. Some say that Thaksin Shinawatra, the populist politician who was ousted in the last coup, may be preparing to come back the same way he was forced out: through a military backed overthrow of the government. He's popular with the monks and the have-nots of Thailand, and has been spending time in temples across the country. Supposedly this temple tour is to atone--or make merit--for past sins. Thaksin insists that it only looks very much like a political campaign.

The rumors of a Thaksin coup have sparked rumors that his opponents could stage a pre-emptive coup to establish their own version of military rule before Thaksin can build his. No one expects Thailand to become another Burma, but talk of competing coups has many saying it is only a question of who does it first.

-- John Carney, who is vacationing in South East Asia, has never stage a coup, military or otherwise.

Traders in Thailand may be about to receive some much needed tax relief. Speaking to a conference of economics reporters in Bangkok, Thai finance minister Suapong Subwonglee (I'm sorry, that's what names are like here) said the government is considering waiving capital gains taxes for bond traders. this tax exemption is already enjoyed by equity traders, and the differential tax treatment creates exactly the kind of market distortions you would expect. The sting of capital gains taxes for debt trading is being felt even more now that we've got a global credit crunch under way.

The proposed reform has its critics, of course. Some worry the move might encourage irresponsible debt trading, perhaps triggering the kind of losses seen in US and European investment banks. Thai banks have largely avoided these losses, save for some CDO missteps.

What's more, this is Thailand and that means there are religious implications to the timing of everything. Some have said the timing of this tax change is particularly inauspicious. Astrologers have been cited in the major daily papers, and there is talk of the "dark god" Rahu.

Most of this kind of economics--if that's what it is--is beyond me. But then again, in the US Democrats seem to spend more time talking about trade policies in churches than Thai politicians do in temples. Does Jesus care more about economics than Buddha?

--John Carney, DealBreaker's editor in chief, is enjoying his vacation in Thailand despite the evidence to the contrary provided by all these posts.

Before I get accused of being obsessed with rice, let me explain that this is all anyone wants to talk about here. A week ago I could get them talking about Wall Street, Bear Stearns, the Fed and losses, losses everywhere, another bank on the brink. But now it's all rice, all the time.

Indonesia's put in export limits. Hong Kong demand is still expected to be high. Fertilizer, which is already getting pricey, is said to be setting up for another price explosion. But the real action, as always, is in the blame game. Whose fault are rising rice prices?

Some have sensibly pointed to the growth of biofuels as pushing prices higher. Others blame the high price of oil, which they say creates the demand for biofuels. But beware of the folks who blame oil. It sounds like a deeper level of analysis but it's largely a myth. Market forces are not creating the demand for biofuels. Government policies are. But its far more psychologically satisfying to blame those conniving Arabs.

The Greens--some of whom are genuine ideologues and others are biofuel profiteers--are blaming the ever present demons: speculators. It's those damned commodities traders, they say. This excuse works even better than the Arabs because commodities traders lack political clout and haven't quite figured out how to organize as part of the ethnic grievance industry. (It doesn't help that there isn't an ethnicity called "commodities traders." Yet.)

--John Carney, DealBreaker's editor, is trying to figure out how to convert biofuel into food while on vacation in Thailand.

In a post yesterday re Ian “Oyster Boy” Roncoroni, you might have detected a slight attitude on our part. See, on Wednesday, we sent OB a cheese steak from Delmonico’s to say “thanks for the page views” his feat of eating 244 Oysters in an hour at Ulysses got us. By Thursday afternoon, we’d heard nary a whisper of appreciation from Roncon. His lack of gratitude really rubbed us the wrong way, and we expressed the simmering anger we were feeling toward him while also introducing a new treat for you: THE SANDWICH FAIRY. The original purpose of TSF, in which we will send a delicious sandwich to randomly selected analysts/associates/traders/ceos/fund managers of our choosing several times a week starting in May, was two-fold. 1. To show you idiots how much we love you 2. To measure just how egregious Oyster Boy’s lack of a response was, relative to his Street brethren. We also offered him a choice—get back to us with a demonstration of gratefulness, or die. Last night, we received this:

From: Ian Roncoroni

To: tips at dealbreaker at com

Date: Thu, 24 Apr 2008 22:14:53 -0400

Subject: thank you!

Thank you, dealbreaker, for the cheesesteak. i actually tried to thank you as soon as it came, but when i clicked the "email" button, it didn’t forward me to the right spot. maybe if i had been more than a hack in the financial services, or gotten into Princeton for more than my ability to dance around a mat, i couldve fig