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1 Merger I'd Like To See -- GoPro and Garmin

By Taylor Carmichael, Travis Hoium, and Jason Hall – Oct 29, 2021 at 11:45PM

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While the rumored PayPal-Pinterest merger isn't going to happen, it's inspired Fool contributors to nominate some merger ideas. Here's why GoPro and Garmin ought to tie the knot.

Last week, while there were rumors flying that PayPal Holdings might be acquiring Pinterest, a few contributors came up with some other merger ideas they would love to see happen.

In this clip from "The 5," recorded on Oct. 21, Motley Fool contributors Travis Hoium and Jason Hall talk about why Garmin (GRMN 1.56%) and GoPro (GPRO 1.15%) might want to unite.

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Jason Hall: This PayPal-Pinterest deal is looking more and more like a real thing. I haven't looked in the past half an hour or so, but neither company has publicly commented so far. If it definitely wasn't something going [laughs] on, somebody at Pinterest would've said, "Nothing's going on." They haven't. Something's going on. You think about the coverage is getting from the Journal, Reuters, Bloomberg, etc., these are folks that make sure their sources are legit before they put things out there. Whether it happens or not, we'll find out. There's definitely a lot of different opinion on whether or not it's a good match. As somebody who bought shares [laughs] early February of Pinterest near its all-time high, I'm not very happy about this deal, but that's another story for another day. What I thought we would do as our Hey, PayPal, hold my beer topic is, each of us talk about maybe a couple of companies that we think would be stronger together. Travis, you want to kick us off here?

Travis Hoium: Yeah. Let's go with GoPro and Garmin. Here's two action sports companies, if you will. One that has really struggled to find its footing, that's GoPro. They went public, it was one of the hottest stocks to hit the market when they IPO-ed and then just crashed back to earth. They've really spent the last four or five years trying to figure out what their business is. They're, at this point, left with the action camera that they have. That's a great product, but it's a very small and niche business. I have been arguing for years, I think, at this point that their best move would be to sell to a company that's either much bigger than them or who has complementary products. That complementary product company that I think really fits with them is [Garmin]. You have a lot of crossover with the markets that they're serving, could be a lot of crossover with a lot of the retailers that they're working with as well, the online business. I think a lot of synergies that you could see there. An example of the kind of company that's executed this is Vista Outdoor who owns Gyro, CamelBak, Bell Helmets, a number of gun manufacturing brands. Just pulling together these brands that you would see at a store like REI, you find out that they're all made by the same manufacturer.

Hall: But just the ROI on getting your logistics infrastructure dialed in as a couple of percentage points by itself.

Hoium: Exactly. Garmin is trying to get into the action camera space. Well, why do it yourself when you can just acquire GoPro? I keep thinking, I have a GoPro. I'm wearing the Garmin watch. Wouldn't it be cool if I could just click a button on my watch and take a picture if my GoPro is on my helmet. That's the kind of integration that I think that they could have too between their products. I think that would be an interesting one.

Travis Hoium owns shares of PayPal Holdings. The Motley Fool owns shares of and recommends PayPal Holdings and Pinterest. The Motley Fool recommends Garmin and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool has a disclosure policy.

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