More Surprise Mergers Fuel Stocks Today

It isn't often that you hear good news about the office retail sector nowadays. If you have a vested interest in it, you'd better soak it all in today.

Shares of struggling office suppliers OfficeMax (NYSE: OMX  ) and Office Depot (NYSE: ODP  ) are soaring in afternoon trading after reports surfaced that the companies are in "advanced" merger discussions.

On the heels of this news, as well as other recent merger-related activity, blue-chip stocks are up today. With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is higher by 48 points, or 0.34%.

Merger mania
While the two office suppliers are the latest companies to seek a merger, there's been a flurry of M&A activity over the last two weeks, as my colleague Amanda Alix recently discussed.

Personal-computer maker Dell is going private, Warren Buffet's Berkshire Hathaway is purchasing Heinz, American Airlines and US Airways are coming together to form the largest domestic airliner, and cable giant Comcast is completing its multibillion-dollar acquisition of NBCUniversal.

According to Bloomberg News, a total of $14 billion in deals was announced last Thursday alone, bringing February's total to more than $140 billion -- and we're little more than halfway through the month. By comparison, in both January and February of last year, the total deal flow came in at $99.6 billion.

On the heels of this news, it should be no surprise that shares of Bank of America (NYSE: BAC  ) are leading the Dow higher today. Thanks to its own acquisition of Merrill Lynch in 2008, B of A now has the second-largest investment bank by revenue in the U.S. This positions it perfectly to exploit increased merger activity for the benefit of its own shareholders.

Alternatively, shares of UnitedHealth Group (NYSE: UNH  ) , the Dow's most recent addition, are down 1.7% in afternoon trading. After the market closed on Friday, the government released data hinting at steeper-than-expected payment cuts for Medicare recipients.

The Centers for Medicare and Medicaid said it expects costs per person for Medicare Advantage plans to drop by more than 2% next year. Because these plans are offered through health insurers like UnitedHealth, any drop would almost necessarily migrate to their bottom lines.

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