three brief items

1. Routine votes from brokers

The Securities and Exchange Commission has recently put out for comment a proposed amendment to NYSE rule 452. This rule allows brokers to cast votes on certain routine matters on a client/investor's behalf, if that investor (the beneficial owner) has not provided specific instructions to the broker at least 10 days before a scheduled meeting.

The significance of the practice is that it helps companies meet quorum requirements for those boring issues real people don't care about.

But of course there is lots of room for debate over what should or shouldn't count as a routine issue for this purpose. I hope to have something more to say here along these lines next week.

2. Orthofix resisting Ramius nominees

Ramius LLC and affiliated entities are trying to put three nominees on the board of the orthopedics-product company Orthofix. The nominees are: J. Michael Egan, Peter A. Feld and Charles T. Orsatti. If successful, they will replace current Chairman of the Board James F. Gero, and directors Peter J. Hewett and Walter P. Von Wartburg.

Orthofix is resisting, and the matter will presumably be resolved by or at a special meeting of the company's shareholders on April 2.

Proxy Governance Inc. has issued its own report on this contest, in which it said: "The problem with the dissident campaign is not an inability to evaluate what went wrong, but the profound absense of a plan to effect a credible recovery."

Orthofix is of course ensuring that everybody knows that PGI has said this.

3. CV Therapeutics takeover bid ends

Astellas Pharma, a Japanese company, announced last week the end of its hostile bid for CV Therapeutics. It had made a tender offer of $16 a share.

Astellas was outbid by Gilead Sciences, and Astellas says that it doesn't see value for its shareholders in trying to top Gilead's offer of $20 a share.

My impression is that there is a lot of dry powder out there, especially in the far East. Companies have responded to the crises of the last year and a half by selling assets and holding cash. Now they're tire of cash. Cash is boring. They want to put it to work. We may see a lot of merger and acquisition activity and even some bidding wars coming down the pike, and this one may look like a harbinger.

Gilead and CV are both California-based companies, so this is a neighbor-buys-neighbor story. But not every Far Eastern bidder will withdraw with such quiet grace.

Penn National Gaming

Penn National Gaming owns and operates gambling facilities, (including racetracks) -- operating in 14 of the states of the US and in the province of Ontario.

Just last week it issued 12,500 shares of preferred stock to raise $1.25 billion. It had to raise that money in order to get out of a contract to be acquired by Fortress Investment Group and Centerbridge Partners -- a deal that was drawn up in the summer of 2007, and thereafter unravelled as have so many others during this credit crunch.

PNG holds its annual stockholders meeting on November 12. The management will ask stockholders to approve its long-term incentive compensation plan. There will be some opposition to this.

Indeed, at last year's meeting stockholders voted against a similar plan, which as this year involved seeting aside a substantial chunk of the issued equity for awards of various sorts to both employee and non-employee directors. One of the proxy advisory groups, Proxy Governance, has said that that vote reflected "a level of shareholder opposition infrequently seen."

This year the board's compensation committee is saying, in effect, "if the shareholders don't approve this set-aside, we'll just have to incraese the honchos' compensation with larger cash salaries."

As threats go, that's pretty lame. If shareholders are ticked off at management, they'll express this in the manner available to them.

Proxy Governance's report also makes the case that the compensation to these honchos is already high relative to the compensation of directors in comparable firms.

Personally, I'll be pulling for another rebellion in the ranks this year.

Bronco Drilling: Death of a Deal

On Friday, Bronco Drilling and Allis-Chalmers Energy announced that they've abandoned their plans to merge "in light of clear indications that Bronco stockholders would not adopt the merger agreement."

I discussed the dynamics of this deal on Tuesday, August 4. The price did seem low, and stockholder resistence understandable.

The special shareholders' meeting that had been scheduled for August 14 to vote on the merger has now accordingly been cancelled.

Here are three items from the death of the deal:

* July 30, 2008: Proxy Governance Inc., an independent proxy advisory firm, issues a report recommending opposition to the merger. "We do not support this proposal because - in the context of share price appreciation for peers in the period since the announcement - it does not appear to offer a meaningful takeover premium, and because the share price itself - which is currently at a premium to the proposed merger consideration - seems to bolster the arguments of large shareholders that the deal undervalues the company."

* August 5, 2008, FBR Capital Markets issues a report speaking of the "strong underlying land rig market," which should allow Bronco as an independent company to outperform the valuation the dealmakers had attached to it. They expressed their "expectation that fewer than 50% of BRNC's shareholders will vote for the ALY merger agreement. Such a rejection of the current deal should allow the market to recognize the value of BRNC that has been capped by the under-priced ALY offer."

* Same day, Jefferies & Company, Inc. is heard from, another report, "Given the dramatic improvement in land rig fundamentals this year, we generally agree with the dissenting shareholders that the ALY transaction undervalues the Company."

We will see more of this. Companies trying to sell themselves at fire sale prices, only to find that the shareholders rebel, saying: "Hold on until conditions for deals improve, and get us the better price that'll be available then!"

Icahn's Slate Loses at BIIB

I reported in April that Carl Icahn was making waves at a company called Biogen Idec.

Now we can report that Icahn put forward a three-nominee slate in a contested election for four open board seats at the annual meeting held last week.

It isn't clear what the margin of defeat was. But it is now clear that all the Icahn-backed candidates were defeated.

The management candidates received an important assist from each of the major proxy advisory services. ISS Governance Services, part of RiskMetrics Group, said in its report that "the dissident has not met its burden of proving that board change is warranted at Idec. Absent a showing that the incumbent board has failed in some fashion, we find it difficult to support the removal of directors."

Said Glass Lewis: "Shareholders should support management's nominees. In our opinion the current board and executives have created substantial value for shareholders and we believe that the Company has solid growth opportunities as a stand-alone entity."

And to make it unanimous, Proxy Governance weighed in thus: "Given the track record of this board and its management team over the five years since Biogen and Idec merged, as well as significant performance targets to which the company has committed itself through 2010, we believe shareholders will be better served by re-electing the management slate of nominees."

The thing about Icahn is -- he keeps up with these things, and over time can simply wear opposition down. He may have something more to say about BIIB going forward, or he may sell his shares and move on to something else.

He might, for example, (I'm just guessing!) want to liquidate his position in BIIB in order to buy more shares of Yahoo, where his nuisance value is only beginning to manifest itself.