Pfizer and AT&T Get Answer on M&A Bids, While Campbell's Cold Soup Disappoints

The three things you need to know on May 20.

May 19, 2014 at 11:00PM

While you're frantically emailing all your second coolest friends to nail down some last-minute Memorial Day plans, the stock market was busy getting the week off to a positive start. The Dow Jones Industrial Average (DJINDICES:^DJI) gained 21 points Monday after some major mergers-and-acquisition developments.

1. AT&T is buying DirecTV for $48.5 billion
AT&T (NYSE:T) wants video, so it announced Sunday that it's buying DirecTV (NASDAQ:DTV) for $48.5 billion, ending weeks of rumor and speculation. The merger adds satellite TV to AT&T's existing wireless, phone, and Internet packages.

What happened to TV? Now that Comcast is buying Time Warner Cable and DirecTV is being consumed by AT&T, there are two power couples in TV (and we don't mean Jay-Z and Queen Bey). Both big mergers need clearance from the government's anti-monopoly police, aka the Justice Department, but AT&T claims that this deal won't kill any competition in the industry. AT&T and DirecTV technically don't compete with each other, so couch potatoes don't need to fear a price increase. We want that claim vetted by the next episode of Fact or Fiction, though.

Don't forget the baggage that comes with DirecTV. Besides the $48.5 billion price it's paying shareholders of DirecTV (about 30% cash and 70% new AT&T shares), it's also taking on DirecTV's debt. This means that AT&T thinks the satellite dish company's worth is over $67 billion. 

2. Campbell Soup stock sinks as consumers stop sipping soup
There's nothing solid about the first-quarter performance of liquid legend Campbell Soup (NYSE:CPB). Shares fell 2.4% Monday after the company reported generating just $2 billion in quarterly revenue, which was roughly the same as the same period last year. Investors felt as if they bought chicken noodle soup but found just a few lame noodles in the broth.

The only good-tasting news from Campbell was that the company isn't completely reliant on soup demand from sick kindergarteners. The processed-food giant also owns fruit and veggie producer Bolthouse Farms and your favorite microwaveable marinara sauce, Prego -- both of which are part of Campbell's "Simple Meals" division that saw sales grow 7% from last year.

The takeaway is that investors didn't just dislike Campbell's numbers; they also weren't keen on the company's outlook. Despite an increase in what CEO Denise Morrison called "promotional activity" (aka Campbell's recent mediocre advertising campaigns), soup sales have simply remained flat. And as a result, Campbell had to lower its 2014 sales estimates from 4%-5% to 3% annual growth.

3. AstraZeneca says final "no, thanks" to Pfizer
Rejection is tough, especially when you offer the other person $100 billion and still get rejected. British pharmaceutical company AstraZeneca officially rejected Pfizer's "final offer" to acquire the company.

"Undervalue" is the world of the day. According to the AstraZeneca board, Pfizer's final offer of $116 billion wasn't enough and Pfizer didn't appreciate the insane science going on at Astra. Pfizer's latest offer actually values the British company much higher than the stock markets did just a month ago, but the Brits just didn't trust the NYC-based company's motives. It seemed like a tax and profit play.

It was also political right from the beginning. British companies are as proud as an English bulldog's big jaw, so the idea of getting bought by America's biggest pharma company didn't sit well with the redcoats. Despite promises that jobs would stay in England, AstraZeneca's board wasn't convinced that there were real plans to have the company's work together.

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As originally published on MarketSnacks.com

Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends DirecTV. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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