Buyout or Sellout?

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

Breaking down the buildup
To help, we'll turn to the 125,000-plus investors in Motley Fool CAPS. A combination of two companies with high CAPS ratings should bode well for the new company, 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 are 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.

Another try
A few years ago, merger mania swept Japanese pharmaceuticals. Although the mergers are fewer now, Japanese company Astellas Pharmaceutical -- itself the product of a merger -- just swept in and offered $1 billion for the manufacturer of the heart imaging diagnostic aids that Astellas markets. CV Therapeutics previously turned down this offer, but maybe making this bid public will do the trick.

That's not what some investors are thinking, however. CAPS All-Star member FleaBagger is skeptical about the stock and the deal: "Will drift down/sideways for a month or so as buyout-hopeful buyers realize it won't sell to Astrella."

Troy2008 is another All-Star who thinks CV Therapeutics, a Motley Fool Rule Breakers recommendation, is determined to be independent, even if the offer is tempting. The CAPS member writes: "It was a great offer 1 Billion, They don't have any other offers and want to go at it alone. [Price per share] should drift lower and lower from 16 to 10."

As an independent drugmaker, CV Therapeutics does make for an attractive acquisition target, particularly for larger companies looking to shore up their pipelines. Mylan Laboratories (NASDAQ:MYL), with its own passel of therapies, might also make a nice trophy.

Playing in the margins
The chance to develop the next generation of legal and compliance software is part of the charm that Autonomy sees in acquiring Interwoven, an enterprise content management vendor with clients such as Microsoft (NASDAQ:MSFT) and Airbus. It also gives Autonomy, based in the U.K., an open door into U.S. markets.

Highly rated CAPS All-Star Rep07 writes that Interwoven's price was attractive for a software play:

Reasonably valued on fundamentals, though its product status and future is unknown to me. ... But this one may have paid its dues. No debt, and within a reasonable trading range of 8-16. So worth a try at this level.

A value-added offer
What's your take on these deals? Let us know on Motley Fool CAPS. Start your own research by reading a company's financial reports, scrutinizing key data and charts, and examining the comments your fellow investors have made -- all from a stock's CAPS page.