Barron's Good Takeover Targets 7-2-07

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From Barron's 7-2-07:

"Wall Street's worries about the financing of giant leveraged buyouts have depressed the shares of takeover targets, creating opportunities for investors willing to bet that the deals will be completed.

Pending LBOs could require up to $300 billion in financing, prompting concern about the willingness of banks and high-yield investors to absorb that mountain of debt. In the face of such uncertainty, investors now can earn 10%-plus returns on such targets as Harrah's Entertainment (ticker: HET), Alltel (AT), Alliance Data Systems (ADS) and First Data (FDC).

"The market is about as attractive as we've seen in a while," says Mike Shannon, co-manager of the $1.9 billion Merger Fund (MERFX), an arbitrage fund. He says the annualized return on about 150 targets worldwide is about 15%, versus 12% just a week ago."

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