We noted yesterday that InBev officially announced its attempt to oust the entire Anheuser Busch board, but the dynastic politics of the St. Louis brewer always add a bit of color to the blandest corporate proceedings.

One interesting twist is that InBev nominated Adolphus Busch IV, uncle to August IV. While the Buschs’ entire holdings are less than 5% of the company, meaning that Adolphus isn’t going to swing the deal by himself, we appreciate a good family drama, preferably about uncles turning on their own dynasty.

Adolphus was the author of an earlier letter to the Anheuser-Busch board that pleaded with directors to accept, or at least consider, InBev’s offer. He stated that this was the only way that “Budweiser will once again be truly the ‘King of Beers.’” We like the melodramatic flourish at the end, but we would have begun the letter somewhat differently: “Now is the winter of our discontent, Made glorious summer by this sun of Bud.”

-senior royal family correspondent Andrew

The $13.25 billion acquisition of Electronic Data Systems by Hewlett-Packard—the ninth largest tech deal ever, according to DealLogic—has moved the M&A league table standings, DealJournal Heidi Moore reports. Before the deal was announced, Goldman Sachs and Morgan Stanley led this year’s ranking from advising technology companies on mergers. But neither bank has a role in the H-P deal, pushing them down in the rankings

“Goldman ranked first with $14 billion of announced deals to its credit this year, and Morgan Stanley ranked second with $11 billion according to investment-banking research provider Dealogic,” Moore writes. “But now, Goldman is in third place, displaced by Lehman Brothers and J.P. Morgan. Lehman has jumped from fifth to first place with $17 billion of deals to its credit, while J.P. Morgan — which, just yesterday, languished in seventh place with only about $2.2 billion of tech deals to its credit — has vaulted to second place in the rankings from seventh place. Morgan Stanley has fallen to No. 5.”

Citigroup and Evercore Partners advised Electronic Data on the deal. J.P. Morgan Chase and Lehman Brothers advised Hewlett-Packard.

Hewlett-Packard: The Advisers [Deal Journal]

This is the closest we’ve ever come to a NSFW acquisition by a public company. Dick’s Sporting Goods is picking up Chick’s Sporting Goods, which is privately held. Dick’s will pay $40 million in cash and assume around $31 million of indebtedness. There’s also a provision for an additional $5 million payout if Chick’s performs well. Which is probably another dirty joke in itself.

Dick’s Sporting Goods Agrees to Acquire Chick’s Sporting Goods [Press Release via Yahoo]

The bank that seems to be everywhere in New York city is being bought by TD Bank, creating the fifth largest bank—with $312 billion of deposits—in the US. TD Bank will pay $8.5 billion of cash and stock for Commerce.

Commerce Bank was the fast food chain of banking. It’s founder Vernon Hill, who is said to own the largest private house in New Jersey, started as a fast-food franchise owner before starting up Commerce Bancorp in 1973.

Commerce shareholders will get 0.412 shares of TD Bank and $10.50 in cash. That works out to a 6.6 percent premium, although some would argue that the bank was already trading at a premium after Hill resigned and speculators began whispering that the bank was in play.

TD Bank is Canadian. So, you know, blame Canada.

Deal Press Release [Newswire]

Although no one has ever found a Chinese version of the supposedly-Chinese imprecation “may you live in interesting times,” we heard it quite a bit over the long weekend. We do indeed live in interesting times when the president and the chairman of the Federal Reserve need to give booster-ish speeches going into a long weekend to quell what many feared was quickly mounting into a panic in both the credit and equities markets.

Despite a credit crunch and equity market volatility keeping August more interesting than many expected, it was a very slow time for much of the finance industry. The mergers and acquisitions pace slowed to a crawl. It was the slowest month for mergers since 2004, according to research firm Dealogic. Europe’s corporate-bond issuance having plunged more than 75% last month. (High-rated corporate bond issuances in the US, however, were up, as investors fled from riskier debt.) The high yield debt market basically closed up shop for the month, hitting what the Wall Street Journal calls a “near all time low.”

The wise and wealthy we spoke to over the weekend (some of whom seem a bit less wise and probably less wealthy after market turbulence in mid-August) expect only more of the same.

“It’s going to be a wild ride through September,” a portfolio manager at a major institutional investor told us over the weekend. “Look at what happens in high yield. If they can’t get the high yield market cranking again, there’s going to be a lot of pain everywhere.”

Being told that August was slow seems a bit like waking up with a raging hangover and being told the party was dull. Well, yes. It might have been slow. But it was a very wild slow.

Slowest August since ‘04 [Reuters Dealzone]

Oasis for Bonds: Investment-Grade Issuance Soars [Wall Street Journal]

Things got weird today as Dutch chemical giant Basell showed up to the prom with a rebound date after being left heartbroken by Huntsman and co-yearbook committee treasurer Apollo Management.

Basell ended up taking U.S. based Lyondell Chemical to the dance, and footing a $12.1 billion all cash dinner bill. The chemical attraction between the two companies is undeniable (Lyondell’s ethylene to Basell’s polyolefins), and will create a company with $34 billion in revenue and 15,000 employees around the world.

Last week, Basell was outbid at the last minute by Apollo on a $5.6 billion offer to acquire Huntsman Corp. It is rumored that Basell walked away because Lyondell is in its swim unit in gym class and wow, just wow (and Shell Chemicals said that Formosa Plastics said that Huntsman totally “stuffs” its earnings). Certain drama lingers. Dupont said that it heard Basell tell its friend Dow Chemical at BASF’s locker that it still wasn’t over Huntsman.

Regardless, putting its rose in a fisted glove (what does that mean?!) for now, Basell and Lyondell are ready to get it together and make it nice.

Basell to Buy Lyondell for $12.1B [AP via Yahoo Finance]

Vodafone considered plans to buy all of Verizon in order to acquire the 65 percent stake in the Verizon Wireless business it does not own, according Alphaville, the Financial Times blog run by Paul Murphy and Neil Hume. According to the plan, Vodafone would pay around $160 billion for Verizon, and then spin off the the landline business to a private equity consortium, according to Paul Murphy’s report.

The story nicely reverses the conventional wisdom which held that Verizon would eventually buy out Vodafone’s stake in the jointly owned wireless business. It’s what folks used to call a “Pac Man” deal. You know, Pac Man is in danger of getting eaten by the ghost dudes until he bites the magic pill that lets him turn around and eat them instead.

Despite all the verbal parachutes and escape hatches the Alphaville guys put into their story, shares of Verizon indicated upwards in pre-trading after the story was published as part of the daily “Market’s Live” discussion. Vodafone re-acted quickly to say that they have “no plans” to acquire Verizon. But they would probably say that anyway. No-one ever has any plans until they are ready to actually execute the plans.

Will this deal happen? Alphaville puts its odds at around thirty-percent. We spoke to some investment bankers who said that they had talked to private equity people who had expressed some interest in participating in the spin-off portion of the deal. Alphaville’s Paul Murphy told CNBC this morning that Vodafone had looked at the plans over the course of weeks and in some detail.

So what it sounds like to us is the usual investment banker driven acquisition story. Investment bankers most likely approached Vodafone with the plan. They probably put some feelers out to private equity dealmakers to test the spin-off portion of the transaction. Vodafone probably looked at the pitch books, and had some meetings with bankers.

But by focusing on the “eye-popping” $160 billion takeover bid, market watchers may be overlooking the other story from Alphaville: that Vodafone is also considering exercising a little known put-option that would let it force Verizon to buy back the wireless business at a cost of $20 billion. That would certainly help Vodafone cheif Arun Sarin win over disgruntled shareholders who have been pressuring the company to focus on cash generation over M&A driven expansion.

Vodafone’s extraordinary $160bn Verizon plan [FT Alphaville]
Vodafone dismisses Verizon bid talk [Telegraph]

Playtex Products (NYSE: PYX) is having an especially heavy flow day, up almost 16% to a new 52-week high after Energizer announced it would acquire the company for $1.2 billion. Energizer has looked to stop the bleeding from its core products with a regular cycle of spotting available consumer product manufacturing targets. Aggressive periodic acquisitions have helped shares of Energizer double in the past year. Not known for its out of the box thinking (picking up an extra consumer staple here and there), Energizer’s management was aided in this case by keeping its thinking strictly inside the box. Energizer’s rationale, from Bloomberg:

“Energizer is interested in very well-known brands that can benefit from further operating and distribution improvement,” said Bob Goldsborough, vice president of research at Chicago-based Ariel Capital Management LLC (Ariel is the company’s largest investor and owned about 6.5 million Energizer shares as of July 10). “They hoped to diversify away from just batteries, but wanted to stay in categories that would be distributed at the same places.”

Along with diversifying its consumer product offerings, Energizer hopes to leverage the myriad of marketing synergies the Playtex deal provides. From now on, people will want to buy Playtex products for that period that keeps going, and going, and going…

Also, according to market research, girls have a much easier time putting something in their hooha when it has lagomorphic associations, (girls sure do love “The Rabbit,” of Sex and the City fame).

The Playtex sale is a victory for Harbinger Capital, the company’s largest institutional investor with a 20% stake. Fearing that the company was bloated by the extent of its product offerings, Harbinger has been pushing for Playtex to shed its extra bulk and focus on its most profitable divisions, or abort that strategy all together and seek a sale of the whole company.

Playtex was entertaining offers from Duracell, but worried about the potential health risks associated with a copper top.

Energizer to Buy Playtex Products for $1.2 Billion [Bloomberg]

The co-author of the fabricated tale from Friday about News Corp. having bought Dow Jones is sticking by his story. Andrew Neil, who wrote the article with James Forsyt, and is “credible” because (in light of?) he edited Murdoch’s Sunday Times of London for 11 years, took issue with the fact that Dow Jones representatives called him out for lying. His take? “[The protestations] are rubbish…They’re all swearing at us because, I assume, they’re all out in the Hamptons.” Mr. Neil, the Times reports, was drinking at the Ritz at the time.

Earlier: Rupert Murdoch Does Not Own Dow Jones…Yet!
Interminable Dow Jones Saga Possibly Over?

Expert on Murdoch Insisted the Dow Jones Deal Was Done [NYT]

It’s only been reported in one British paper (so let’s remain skeptical, because those publications have a tendency to lie) but according to The Business Rupert Murdoch has “succeed with his $5 billion bid for Dow Jones.”

Allegedly, negotiations have been completed (less, “we want more money,” more “editorial independence, don’t make this the Post, you can only hire and fire the top editors and publishers, etc”), the board says the deal will be accepted by the Bancrofts over the next few days and a formal announcement is expected net week. News Corp will apparently pay $60/share, a 67% premium on the $36/share price in April.

Like we said, no one else has this story, though one of the writers, Andrew Neil, is a former “Murdoch lieutenant,” so perhaps that adds a miniscule amount of plausibility. According to CNBC’s David Faber no deal has been reached, despite news to the contrary from “some rag in a far away place.” Anyone else care to comment?

EXCLUSIVE: Rupert Murdoch buys Dow Jones, owners of the Wall Street Journal [The Business via Gawker]
‘Murdoch buys Dow Jones’ report [The Guardian]

Our more fashionable little sister site, Fashionista.com, noticed today that Esprit is on the hunt for a small, high-end brand to buy. Despite its powerful earnings and impressive performance of its stock—Bloomberg notes that it is the best performing stock on the Hang Seng index in ten-years—the company’s executives feel the brand lacks a little luxury appeal.

“Even though they sell loads of sportswear to Germany and the rest of Europe, they know they’ve got nothing on TopShop, H&M, or even The Gap in terms of style cred,” Fashionista writes. “Their hope is to find a company that makes Esprit look better to designers and fashion folk who might, eventually, pair with the line.”

The Fashionista readers have been chiming in with the names of potential targets. Luella and Diane von Furstenberg both seem to be favorites.

What Should Esprit Buy? [Fashionista]

Is Rupert Murdoch expressing unbridled confidence (“I can take a few days off, Dow Jones will be there when I get back”) or throwing in the towel?

Check out the full picture after the jump.

Although Pearson PLC is being called a possible ‘white knight’ bidder for Dow Jones & Co, many in the newsroom of the Wall Street Journal are not enthusiastic about being bought by the publisher of the Financial Times. Reporters at the Wall Street Journal, many of whom regard the Financial Times as an inferior paper with low-quality “Brit journo” standards of fact-checking and sourcing, are worried that ownership by Pearson will deteriorate journalistic standards at the paper, a source at the Journal told DealBreaker.

“I took a straw poll around the office. A lot of people are worried about what this will do to the Journal’s reporting,” the source said.

Word began to circulate late on Friday afternoon that General Electric and Financial Times publisher Pearson were “in talks” about a potential joint offer for Dow Jones & Co. Over the weekend, the story ran in the Financial Times, the Wall Street Journal and the New York Times. A decision on whether or not to make a bid is expected to come within days.

A news of a possible bid from Pearson and General Electric may have the ironic effect of making the bid from News Corp more attractive. While News Corp chairman Rupert Murdoch has promised to spend more on the Wall Street Journal, expand its international presence and has announced plans to launch a new cable news network for financial news that may give Journal reporters more outlets for their reporting, a bid from Pearson and General Electric would likely involve mostly cost-cutting synergies.

[After the jump, the not-exactly-surprising news that Journal reporters aren’t totally psyched about working for the publishers of the Financial Times.]

It looks like the Bancroft family blinked first, issuing a proposal on editorial independence to NewsCorp today. Murdoch’s not likely to agreed to the proposal, however. Even the Bancroft’s don’t sound too hopeful, noting that “This is not a done deal.”

Reporting on itself, the Journal said that negotiations between Murdoch and the Bancrofts would only continue if family is convinced that it has safeguarded. But it’s safe to say that Murdoch acquisition ambitions moved one step closer to reality with this move by the Bancrofts. One rule of negotiating deals it that the side that comes back to the table first certainly isn’t looking to walk away altogether.

Also, last week Dow Jones granted 135 managers eligibility for severance pay in the event of new ownership. As part of this move, Dow Jones CEO Richard Zannino’s current golden parachute, which is worth $19.5 million would increase by 20%-30%. Nothing like promising management a payday to get them behind the deal.

Both these events would have moved the needle on the Murdoch meter if not for the ominous sign that arose yesterday: Jim Cramer started giving unsolicited advice to Murdoch. This clearly spells trouble. Any progress from the Bancroft move and the new golden parachutes was completely erased by the entrance of the first citizen of Cramerica.

[This report filed by Senior Rupert Murdoch correspondent Peter Ribic.]

Bancrofts Set Revised Safeguard Proposals [Wall Street Journal]
Dow Jones Expands Its Golden Parachute [Slate.com]
Rupert’s Eleven-Year Hunt [New York Magazine]

According to a new study in the Journal of Finance they do, from DealBook:

The study’s authors conclude, C.E.O.’s have a personal economic incentive to go ahead with a questionable merger — because even if it is a loser, they will probably still win. Two researchers, Jarrad Harford of the University of Washington Business School in Seattle and Kai Li from the Sauder School of Business at the University of British Columbia, crunched the numbers on 370 mergers of publicly traded United States companies announced from 1993 to 2000.

In fact, CEOs of companies that underperformed for a year after an acquisition were 43% richer than before. The inflow of new stock and option grants after a major deal is what makes this all possible, and it helps that grants are almost never rescinded if a deal turns sour. Naturally, boards that were more independent from management were more likely to penalize CEOs who orchestrated bad deals.

C.E.O.’s and Mergers: Nothing to Lose? [DealBook]

Some of us around the DB HQs are very much into this Dow Jones, Rupert Murdoch story. Unfortunately, we melt when it rains (and don’t do mid-town), and were therefore unable to stake out yesterday’s meeting at the Wachtell offices. So we sent Intern Scott. His (wet) report here, his pictures after the lovely lady jump (let that one go).

By popular demand, I present to you my first entry for DB [small bow and preparation for disappointment]. Yesterday, Carney sent me to hang around outside the Wachtell offices in midtown to wait for Elvis Rupert Murdoch to leave the building. Our boy Rupes spent five hours in discussions with the Bancroft family, presumably in conference room 33F, notable for many famous transactions. I arrived at 52nd Street and 6th Avenue at the CBS building, where I met many of my “peers” — photographers, camera crews, bearded weirdos, and reporters. The media (and Carney because he’s part of the media circus) loved this story. So I waited for a bit and talked to some of the people in awkward footwear, learning that some of the more dedicated crews had been on-site since 10am. Most of them had a second crew waiting on 53rd Street to make sure to cover their bases, but here at DealBreaker we like to take our chances (but always get it right, of course).

Now, those of you familiar with 51 West 52nd Street know that there are two entrances, one on the north side and one on the south. Rupes entered on 53rd street covered by umbrellas around 1pm, but I had to gamble on from which door he would emerge. I checked out the scene on 53rd street, and decided to take my chances on 52nd, where I waited. Around 5:05pm everyone picked up their equipment and made for the door, but it was just some other old dude (they all look the same), not our boy. Finally, at 5:35pm, Rupey and a bunch of suits came out of the elevators and lingered near the elevator banks inside. He slowly made his way towards the 52nd street door (imagine my glee), as the assembled paparazzi outside got ready. He emerged, Burberry rain coat in hand, and was instantly hounded by reporters from CNBC and Bloomberg, as well as dozens of flashing cameras (including my own). You can see some of the shots I was able to take before he hopped in a black Escalade (too good for a Town Car but apparently not good enough for the many Maybachs that I saw hanging around) waiting on the corner and sped off under gray skies.

Quite an afternoon.

—Scott Bressler

The only news that really come out of yesterday’s big meeting between Rupert Murdoch and the Bancroft family was metaphorical: a storm was soaking New York as Rupert went into the black tower where the conference took place and the skies were merely overcast when emerged five hours later. We’re not sure if that means anything but it would be better if it did.

Perhaps more telling than the meteorological metaphors made possible by the passing precipitation was that the Bancroft’s emerged from the meeting sounding exactly like Murdoch.

“We had a very long, constructive meeting, and we’ve both gone away to consider both sides,” Murdoch said in a brief interview with Bloomberg.

Later, the Bancrofts issued a statement through spokesman Roy Winnick:“The parties had a constructive dialog and have gone back to consider our positions.”

In case you missed it—the message is that the meeting was constructive!

If the first step in a negotiation is learning to speak the same language, then it looks like there was a lot of progress yesterday. Both Murdoch and the Bancrofts are talking to the public using the same phrases, apparently agreed to in the meeting.

“It shows Murdoch’s strength as a deal maker,” an M&A specialist we spoke to said. “Agreeing to the language of a statement may be a prelude to an agreement about the sale of Dow Jones. The cliché is ‘getting to yes,’ and then staying there. Murdoch seems to have the Bancrofts saying yes already.”

A former private equity buyout professional had an even more colorful way of describing the process of turning a hostile counterpart in a negotiation into a willing partner. “We used to call this the process of ‘Stepfording’ the other side,” he said. The phrase referred to a movie in which wives were reprogrammed into being compliant housewives.

Somewhere behind the sheer, black façade rising 38 stories from a sunken plaza on 52nd Street and the Avenue of the America, representatives from News Corp are expected to meet with representatives from the Bancroft family today. Inside the building—officially the CBS Building but known to neighbors as the “big black rock”— are the offices of Wachtell, Lipton, Rosen & Katz, the law firm retained by the family that controls 64 percent of the voting power of the Dow Jones & Company.

The twin questions asked by those of us outside the tower are: what do the Bancrofts want and what will Rupert Murdoch give them? Murdoch, who heads News Corp, has offered sixty dollars per share for Dow Jones, a sixty-seven percent premium from where the stock had been trading before the takeover bid was announced. He has also offered the Bancroft family and the Wall Street Journal, which is owned by Dow Jones, both flattery and autonomous editorial board for the Wall Street Journal. He has also compared his own family to the Bancrofts, referring to both as newspaper families. Newspapers have described this as a “charm offensive.” What he hasn’t done is indicate that he might be willing to pay even more for the company.

This morning we’ve also heard another thing Murdoch won’t do: cede control of that autonomous editorial board to the Bancroft family. Over the weekend, the Wall Street Journal reported that the Murdoch has said the board would comprise “people with absolutely no business connections to me nor the family.” Echoing a famous line about having cake and eating it, Murdoch reportedly said the family “can’t sell [Dow Jones] and keep it” by controlling the editorial board.

Murdoch May Make Concessions, Up to a Limit, in Dow Jones Talks [Wall Street Journal]
Murdoch May Use `Charm Offensive’ on Bancroft Family [Bloomberg]

The Bancroft family’s decision to meet with Rupert Murdoch means Dow Jones & Company is for sale, according to an employee of the company.

“If they meet, they sell,” said a Dow Jones employee familiar with the thinking of the Bancrofts.

Last night the family released a statement announcing their willingness to meet with News Corp, the media company run by Murdoch, while the board of directors of Dow Jones held a special meeting to discuss the bid. Earlier the family had rejected the $5 billion bid and refused to meet with Murdoch. During the meeting the statement was called “preliminary” but it was not changed after the meeting.

The reporting from the Wall Street Journal and the New York Times also conveyed the impression that the Bancrofts are ready to sell Dow Jones, which they control through their ownership of super-voting class b shares.

“Dow Jones & Co.’s 125-year history as an independent media company could be nearing an end,” the Wall Street Journal’s reporters wrote in the story that broke the news of the Bancroft family change of heart. DealBook, the deal blog of the New York Times, echoed that sentiment, asking “Is this the beginning of the end of an independent Dow Jones & Company?”

The Bancroft family’s statement also announced a willingness to consider offers from other bidders.

Rupert Murdoch’s bid for Dow Jones & Company is heating up again.

The family that controls Dow Jones agreed to meet with News Corporation, the media company headed by Murdoch . News Corp made an unsolicited bid for Dow Jones earlier this month. Until now the Bancroft family, which controls 64% of the voting power of Dow Jones largely through its super-voting class B shares, had refused to meet with Murdoch or representatives of Dow Jones to discuss the offer.

“Since first receiving the News Corporation proposal, the Family has carefully considered and discussed among ourselves and with our advisors how best to achieve that overarching objective, while serving the best interests of the Company’s various constituencies,” the family said in a preliminary statement first reported by the Wall Street Journal, which is owned by Dow Jones.

“After a detailed review of the business of Dow Jones and the evolving competitive environment in which it operates, the Family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corporation,” the statement says.

In early May, News Corp offered $5 billion for Dow Jones, a sixty-seven percent premium over where the stock price trading before the bid. Through representatives on the board of directors of Dow Jones, members of the Bancroft family representing a majority of the voting power declined the offer. The board of directors has officially take no action on the offer. Since making the bid Murdoch has attempted to win support from the Bancroft family, but he has not increased his offer. In recent weeks some analysts began predicting that Murdoch would withdraw the offer if the family continued to refuse to negotiate.

The Wall Street Journal said the statement would be finalized after the conclusion of a meeting of the board of directors, which was underway tonight. At the time this was posted, no statement had been filed with the Securities and Exchange Commission on behalf of Dow Jones or the Bancrofts.

The statement may mean that the Bancrofts are willing to accept an offer from Rupert Murdoch. But by indicating a willingness to sell, they may also be hoping to attract other bidders. Tonight’s statement affirms that the family will also consider other bids.

Bancroft Family Plans to Discuss Dow Jones Bid With News Corp. [Wall Street Journal]
Bancrofts’ Statement on Dow Jones Bid [Wall Street Journal]