Buyout or Sellout?

From tiny acquisitions to massive conglomerate combinations, Wall Street's urge to merge remains strong. How can we tell the deal makers from the deal breakers?

Breaking down the buildup
To help, we'll turn to the 110,000 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. Here's a handful of recently announced deals, and the ratings for each participating company on CAPS' five-star scale:

CAPS ratings courtesy of Motley Fool CAPS; NR = not rated; NA = terms not disclosed.

A headache for Icahn?
The buyout offer for Erbitux maker ImClone Systems represents a 29% premium over the shares' closing price before the deal was announced. The cancer treatment has become a blockbuster drug for upstart ImClone, which has prospered well under the ministrations of Chairman Carl Icahn. He took over the company after it had pulled itself off the market a few years ago, citing low bids. Does the Bristol-Myers Squibb offer value the biotech high enough? The stock is trading above the offer price, which means investors are expecting the bid to be sweetened.

While top-rated CAPS All-Star Vavoom11 figures it's worth a try to "short the pop!" CAPS investors like lulamae12 recommend ImClone as a buy, figuring that its lone drug is a hot commodity:

Jump on this stock. Bristol is trying to by the stock, ImClone Systems, Inc., for $60.00 per share. That could be because they want to get their hands on the newly approved cancer drug. that ImClone has developed. [ImClone] is hot on the market at the current time

Coal dust as gold dust
If Teck Cominco makes good on its purchase of Fording Canadian Coal, the two will have a powerful operation in the Elk Valley coal project. Fording owns 60% of the mine, with Teck owning the other 40%, and the two have used their position to power up their earnings.

Thanks to Teck's ability to make strategic acquisitions, CAPS member stiv123 believes that the miner will remain on top:

this is a well managed company that I continue to accumulate on dips, they have made great strategic aquisitions, and deserve a much higher price.

Coal is wonderful, to be sure, but CAPS member Lennyg02 sees the diversity of its mining operations as the ultimate driver:

diversivied minings, world's largest indium producer (for transparent conductors used in lcd screens and solar panels).

Gold rings
With higher operating costs pinching low-cost gold producer Kinross Gold, boosting its reserves through the acquisition of Aurelian Resources seems like a smart play. Some rivals have instead bought oil producers to control costs.

Gold's value, though it's slipped in recent days, won't go into free fall; as CAPS member SAWMANENC has rather exuberantly suggested, "gold will always be king." (This player's pitch on CAPS is typed in all capital letters. To make it easier on the eyes, the Fool modified the capitalization for this article.)

Therrs gold in them hills, with oilprices increasing and aworld about to fall into the severist depression ever, the only thing of value in a few years may only be gold. Oil will not be King! (Its a thing we use up) Gold will always be King as the mighty dollar falls in value against every currerncy known to man, than we will have to fall back on the one thing that is for sure and worrth anything  (GOLD)

A value-added offer
What's your take on these deals? Tell the CAPS community whether the urge to merge is good to go -- or whether you think it's better for the companies involved to remain independent.