From tiny acquisitions to massive conglomerate combinations, Wall Street's urge to merge remains strong. How can we tell the dealmakers from the deal breakers?
Breaking down the buildup
For help, we'll turn to the 130,000-plus investors in Motley Fool CAPS. A combination of two companies with high CAPS ratings should bode well for the new firm's future results, while a high-rated company that joins a lower-rated one may benefit one set of investors more than the other.
Despite troubles in the capital markets, the deals won't stop; they simply might involve more stock and less cash. Or, like this week, they might just slow to a trickle. Here are a handful of recently announced deals, and the ratings for each company on CAPS' five-star scale:
|
Acquirer |
CAPS Rating |
Target |
CAPS Rating |
Deal Price |
|---|---|---|---|---|
|
eBay |
*** |
Gmarket |
**** |
$1.2 billion |
|
Harris |
**** |
Wireless systems business of Tyco Electronics |
*** |
$675 million |
|
Zurich Financial |
NR |
21st Century Insurance unit of AIG |
** |
$1.9 billion |
|
Express Scripts |
*** |
NextRx unit of WellPoint |
**** |
$4.68 billion |
|
Holly |
**** |
Tulsa refinery of Sunoco |
*** |
$65 million |
|
Kimberly-Clark |
**** |
Jackson Products |
NR |
undisclosed |
CAPS ratings courtesy of Motley Fool CAPS; NR = not rated.
Into it deep
"To market, to market to buy a fat pig; home again, home again jiggety-jig." It's a nursery rhyme day for eBay and Gmarket.
The online auctioneer is paying $24 a share for the South Korean e-commerce marketplace, adding another card to its deck of online retail marts. Gmarket will join eBay's pair of aces -- want-ad service Craigslist, in which eBay holds a sizable minority stake, and South American Internet bazaar MercadoLibre
eBay may actually be able to achieve synergy benefits by buying Gmarket. According to estimates, Gmarket and eBay's affiliate Internet Auction Co. account for some 37% of the online auction experience in Korea; the combined company will be the largest player in that country, and may give eBay a springboard for a big push throughout Asia.
This international expansion has investors interested. CAPS member cjlee001 thinks it's a necessary step to jump-start the auctioneer:
I think the CEO is taking necessary steps to promote growth in this flatlining company. The bid for Gmarket and spinoff of Skype are strategic moves for global expansion and core business concentration.
A value-added offer
What's your take on these deals? Let us know on Motley Fool CAPS. While you're there, you can start your own research on these or other stocks. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. There's more than you think.
