Barr Pharmaceuticals (BRL) - Teva Pharmaceutical (TEVA)

November 4, 2008 (9:15a) - EC Review Details

The European Commission review of this transaction officially started yesterday, November 3, 2008. The provisional review deadline is December 8, 2008.

It will be noted again that the very long delay in submitting the EC notification is viewed as a positive, in general, as it is almost certainly the result of pre-filing discussions and negotiations between the companies and the regulator.

Although some review delay here is possible, if not probable, any preliminary activities with the EC will likely result in a favorable and relatively quick outcome in this transaction.

*Rio Tinto (RTP) - BHP Billiton (BHP)

November 4, 2008 (8:30a) - EC Status

This entry will acknowledge the European Commission's "Statement of Objections", which is considered by this publication to be essentially a non-event in this non-transaction.

BHP has issued the following statements in response to the EU issuance:

"BHP Billiton is continuing to work cooperatively with the European Commission and, in accordance with the established merger review process, will be responding in due course to address the issues raised."

As there has never been an expectation of regulatory approval from the European Commission, there is little to add in terms of analysis at this point. It is fairly obvious that the EC will not approve this proposed transaction by the current January 15, 2009 deadline, and will likely reject it outright barring assurances of major concessions from BHP which would ultimately destroy the rationale for any transaction between these two companies.

Alpha Natural Resources, Inc. (ANR) - Cleveland-Cliffs Inc (CLF)

November 4, 2008 (7:40a) - Status Report

CLF yesterday announced that it will postpone its shareholder meeting for this transaction from November 21 to December 19, 2008, stating the following:

"Cliffs said it rescheduled the meeting to allow shareholders adequate time to consider new information on the financial benefits of the pending transaction. In conjunction with this, Cliffs has also rescheduled the record date for the special meeting as of the close of business on Nov. 19, 2008."

This development occurred just hours after ANR filed with the Delaware Chancery Court in an effort to force CLF to hold its shareholder meeting on the original November 21 date.

With respect to the CLF shareholder meeting delay and transaction in general, the decision by CLF is not terribly surprising given the current market conditions and, perhaps more of an impact, the CLF shareholder concern that has been present from the outset of this deal. As recently as October 6 opposition from Harbinger Capital has been perceived as a possible threat to this deal's completion even with Harbinger's share control attempt failing.

It must be assumed at this stage that Harbinger's efforts succeeded in at least convincing enough CLF shareholder to directly express their concerns with the company to force this delay. As was the case during the summer, CLF remains in a position where it will need to put forth extraordinary efforts to convince its shareholders to approved this deal.

With respect to the Delaware Chancery action, it is currently perceived that ANR's complain will fail to force a CLF shareholder meeting on November 21 precisely for the reasons mentioned above. CLF is likely to argue in Delaware that a November 21 meeting will not allow sufficient time to obtain the necessary shareholder consent, thereby resulting in a failed transaction. Although this may not actually be the case for CLF, under the current conditions it seems unlikely that the Chancery Court will force the company to hold its shareholder meetins at the earlier date.

In sum, this has (again) evolved into another situation where broader market conditions (and in this case, shareholder resistance) pose a very real problem for the deal's successful outcome. It is difficult to believe that CLF possesses any intention of abandoning this merger after the effort is has expended to this point and due to the very clear rationale for the combination. However, the company must now accomplish in a relatively short time what it has evidently failed to do over the least several months: persuade its shareholders to approved the deal.