Dow Hits New Record on Merger Activity; Family Dollar Jumps on Icahn Stake

Stocks didn't a miss step coming back from the weekend today, as shares inched higher into record territory once again. The Dow Jones Industrial Average  (DJINDICES: ^DJI  ) tacked on 18 points, or 0.1%, and the S&P 500 increased by the same percentage, while the Nasdaq gained 0.3%. Volume was light, and there was little macroeconomic news swaying investors, though merger activity seemed to help give stocks a lift.

Drug-maker Merck  (NYSE: MRK  ) agreed to buy Idenix Pharmaceuticals for $3.85 billion, getting access to Idenix's promising pipeline of hepatitis C drugs. Merck shares opened down more than 1% but finished up 0.2%, while Idenix shares jumped a whopping 229%, reflective of the steep premium Merck offered. The news comes after weeks of M&A activity swirling around the pharmaceuticals industry, most notably Pfizer's nixed offer to acquire AstraZeneca.

Elsewhere, Hillshire Brands  (NYSE: HSH  )  jumped 5% as Tyson Foods  (NYSE: TSN  )  appears to have won its bidding war with Pilgrim's Pride for the parent of Jimmy Dean sausages, as Pilgrim's Pride withdrew its proposal following Tyson's latest offer. The nation's No. 1 poultry producer said it will pay $7.7 billion for Hillshire, or $63 a share. Hillshire has not formally accepted the bid, but the acquisition seems inevitable given that Tyson is the only remaining suitor. Notably, Tyson shares fell 6.5%, a sign that investors believe the poultry-maker is overpaying for the parent of Ball Park franks. Hillshire shares, meanwhile, have gained nearly 70% since offering to buy Pinnacle Foods, which sparked the bidding war between Pilgrim's and Tyson to acquire it.

Also moving higher today was Family Dollar  (NYSE: FDO  ) , which finished up 13% after activist investor Carl Icahn disclosed a 9.4% stake in the discount retailer. Icahn called the company "undervalued" and said he seeks to engage with management and perhaps gain seats on the board. In response, Family Dollar adopted a so-called "poison pill," which prevents any single shareholder from holding more than 10% of its shares. The shareholder rights plan works by diluting the stock if someone tries to acquire more than a certain amount. Icahn criticized the move, saying it "puts a damper" on attempts to have a "friendly dialogue." Family Dollar has faced challenges recently, announcing store closures and lowering its financial guidance for the year. Icahn's intentions with the company remain unclear, but the move also sparked speculation that Family Dollar could merge with or be acquired by Dollar General, whose shares finished up 7% on the news. 

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