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

The blue chips gained again as a handful of high-profile mergers pushed stocks higher. Also, Family Dollar shares jumped as Carl Icahn revealed a stake in the company.

Jun 9, 2014 at 10:00PM

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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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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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