Instant wealth creation, or destruction—good deal?

The 'goofus and gallant' of the M&A world: Cramer
The 'Goofus and Gallant' of the M&A world: Cramer   

Jim Cramer saw just how easy it can be to both create substantial wealth and instantly flush it down the drain. New deals surfaced on Wednesday, and the market immediately recognized that there is both a right way and a wrong way to do a deal.

First let's take a look at the right way—Mylan Lab proposed a stock and cash acquisition for Perrigo for $29 billion, and both stocks shot through the roof with approval from investors. The synergies between both companies were so obvious!

"I love this Mylan deal as much as I have loved Perrigo," Cramer said.

Some may have been wary of Perrigo as its last quarter was tainted due to a lighter flu season and Chinese vitamin supplements that hurt the company. However, Cramer thinks these are one-time issues and its business will fit in perfectly.





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The Mylan acquisition comes at a perfect time when all sorts of good acquisitions are being made. Cramer cited his love for the Actavis purchase of Allergan, as Actavis clearly understood how it could further develop Allergan's Botox program. Clearly investors loved it too, as Actavis stock keeps roaring higher.

Cramer says that is the trick to a good deal: Stocks will roar as the synergies between two companies become more well-known and the estimates are taken higher.

Cramer also saw the same brilliance in the FedEx deal to buy TNT at a fraction of the price that UPS was willing to pay for it. This was a perfectly timed deal just as Europe is on an upswing. The result? Both stocks flew higher.

On the other hand, Royal Dutch Shell announced it would buy BG Group for $70 billion. Cramer was not happy with this deal, and considers BG to be the worst, most glutted part of the oil patch. What the heck was Royal Dutch thinking?

In Cramer's perspective, Royal Dutch could have bought so many other properties in the U.S. that were distressed. It could have even paid less than it did for BG that had more in the pipeline. At this point, the deal has become embarrassing, and the only thing saving Royal Dutch's stock right now is the intention of a large dividend.

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"The best hope is that someone comes in and pays even more for BG to relieve shareholders, including my charitable trust, of this ridiculously overpriced agglomeration," the "Mad Money" host said.

So, at the end of the day, Cramer saw both good and bad deals all happen at once. He cited these examples of just how easily billions of dollars can change hands and redirect a stock's trajectory.

"Mylan for Perrigo? Instant wealth creation. Royal Dutch for BG? Instant wealth destruction."

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