Daily News: AOL, Yahoo, JC Penney, Potash, BHP, Goldman Sachs, Sanofi-Aventis, UBS

• AOL, P-E firms consider Yahoo bid. AOL (AOL) and several private-equity firms, including Blackstone (BX), are considering buying Yahoo (YHOO) either as a team or separately, sources said. News Corp. (NWS) was also listed as a potential buyer. An acquisition by AOL would be complicated both strategically, since both major brands face steep challenges, and financially, since AOL’s market cap of $2.7B is just a fraction of Yahoo’s $20.6B. As a result, a number of complex scenarios are being considered, including having Yahoo sell its 40% stake in Alibaba along with several other assets, or possibly even having Yahoo buy AOL. Sources cautioned that talks are still in an early stage and haven’t yet involved Yahoo. In yesterday’s trading, AOL closed +3.25%, BX +2.25%, NWS +0.8%, YHOO +5.7%. Yahoo shares are up another 11.5% in premarket trading (7:00 ET).
• J.C. Penney gears up for a fight. J.C. Penney (JCP) has reportedly hired Goldman Sachs (GS) as it gears up for a possible fight with Pershing Square’s Bill Ackman. The move follows news that Ackman took a 16.5% stake in the retailer and is building an alliance with Vornado Realty Trust (VNO), which holds a 9.9% stake. Ackman, a high-profile activist investor, has already told Penney that he plans to take a hard look at its assets and financial condition, while recent corporate decisions have left Penney with few takeover defenses.
• Proxy battle for Genzyme looks more likely. Sanofi-Aventis (SNY) is getting closer to launching a proxy battle for Genzyme (GENZ), sources say, as it prepares for a drawn-out takeover bid. Though Sanofi CEO Chris Viehbacher raised the possibility in theoretical terms last week, a source said that a proxy battle isn’t theoretical and isn’t that far away, but rather “definitely part of the playbook.” Genzyme is also likely to face pressure from activist investors Carl Icahn and Ralph Whitworth, who won representatives on the board earlier this year. This has led some analysts to suggest that “a proxy fight is possible but it doesn’t necessarily have to be fought by Sanofi-Aventis. If there are enough frustrated shareholders… in the end it might be Genzyme shareholders fighting the battle for Sanofi.” Premarket: SNY +1.1% (7:00 ET).
• Potash shuffles staff in BHP defense. Potash (POT) has promised to relocate some key staff to Saskatchewan province from Chicago, hoping the move will win it some political favor as it fights off BHP Billiton’s (BHP) advances. BHP had pledged to move key jobs back to Canada and beef up the company’s headquarters if it wins control of Potash. Political influence actually will play a role here, as the views of the province’s government will be influential in Canada’s decision, due on November 3, on whether to allow BHP’s hostile bid for Potash to move forward. Premarket: BHP +1.45% (7:00 ET).
• SEC cleared of bias on Goldman charges. A report by the SEC’s Office of Inspector General cleared the agency of improper conduct in its fraud lawsuit against Goldman Sachs (GS). Critics had alleged the timing of the suit was politically motivated, but the report found no evidence that the SEC was trying to influence Congress’s discussion of the financial-regulation bill. The report also found no evidence that the SEC shared information with the media about the Goldman probe before it filed the suit.
• Watchdog weighs in on Treasury’s bailout outsourcing. The Treasury’s decision to hire failed mortgage giants Fannie Mae and Freddie Mac to manage its main foreclosure-prevention program was questionable at best, according to a new report by the Congressional Oversight Panel, and may have increased taxpayer losses. In addition to distracting Fannie and Freddie from their efforts to fix their own financial problems, the Treasury also chose to overlook the mortgage giants’ history of misreporting key data and missing important deadlines. Aside from Fannie and Freddie, the report mostly praises the Treasury’s management of companies it hired to run bailout programs, though it raises questions about the opaque subcontracting process.
• Foreclosure mess gets uglier. A total of 288,345 properties were foreclosed upon in the July-September quarter, up from nearly 270,000 in Q2 and the highest quarterly tally since the real estate market started to tank in 2006. Complicating matters, many of the foreclosures may eventually be challenged in court as fallout from the robo-signing scandals gains momentum and attorneys general across the nation launch an investigation into banks’ foreclosure practices. Decisions by some major banks to temporarily halt foreclosures may end up simply dragging the process out, rather than achieving any substantial improvements in the deteriorating situation. (More: Fannie and Freddie get dragged in to the mess)
• UBS rules out legal action against ex-bosses. UBS (UBS) admitted it made mistakes during the financial crisis but ruled out the possibility that it would take legal action against former executives, including past chairman Marcel Ospel. Among other shortcomings during the financial crisis, UBS also admitted its investment banking growth strategy wasn’t properly planned, its risk control was based too heavily on statistical models, and it rarely questioned the ratings of external agencies. Premarket: UBS +0.4% (7:00 ET).

Source: SeekingAlpha