Cramer: These 10 Companies Ripe for M&A
Don't just stand there, do something!" exclaimed an animated Jim Cramer.
The Mad Money host just couldn't control his enthusiasm after word surfaced that hedge fund Elliott Management will nominate five executives to Hess Corp's board as it pitches a plan to break up the U.S. oil and gas company to boost returns for investors.
"This colossal and colossally underperforming independent oil and gas explorer and producer, which is now the subject of proxy fight by a very aggressive hedge fund, has already vaulted ten points on the news, and I think it can go much higher if the company gets sold or takes the advice of the hedge fund and splits up its assets," said Cramer.
But the excitement doesn't stop there. Cramer is convinced developments outlined above are the tip of the proverbial 'spin-off / M&A' iceberg.
"I think Hess is the beginning," Cramer insisted.
Therefore the Mad Money host thinks it's wise to review other companies he's identified, that could be similar to Hess; that is benefit significantly from M&A or a spin-off.
"I believe Alliant Techsystems, a two billion dollar defense contractor is right for the pickings given what looks like the possibility of sequestration coming to the defense department's budget," said Cramer.
Alliant's niche includes precision weapons systems including missile and space programs.
However Cramer thinks as a bullet maker, it could attract interest. "Alliant Techsystems has secured a gigantic bullet contract that would be the envy of any contractor who needs to bulk up on business to augment or to offset reduced programs," Cramer said.
"To me the reaction of the Street to Caterpillar's earnings, the upgrade yesterday of Terex and the sharply better than expected earnings from United Rentals tells me that MTW's crane business is worth the price of the company," Cramer said.
In addition Manitowoc has a food services arm. "Middleby, a $2.6 billion company could easily afford to take a run at MTW's food service business which would allow the remaining crane business to shine," speculated Cramer.
Johnson & Johnson
"The Street continues to speculate that Johnson & Johnson will join the ranks of the other old line pharmas and do some breaking up. The pieces here are worth far more than the current $74 price tag," said Cramer."
"On last week's call the company made it clear that it is now going to start pruning divisions that aren't in the first or second spots when it comes to share," Cramer added.
"Hain is the one stop solution for any one the slower growing packaged food companies to take aisle space in the fastest growing public supermarket chain on earth, Whole Foods," said Cramer.
"If I were running Campbell's Soup, a company devoid of serious organic growth, I would take the cheap money every bank is offering and I would purchase Hain," Cramer said.
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Cramer however still sees opportunity. He thinks Uggs, the flagship brand of Decker's complements the VF Corp portfolio. "VF Corp. bought Timberland not that long ago and was able to reinvigorate almost immediately," he reminded.
Mine Safety Appliances
"After listening to the Dupont, 3M and Honeywell calls and hearing how well their safety businesses are going I still can't believe there's not been a bidding war for Mine Safety Appliances," Cramer said. "I'd think they'd take advantage of the cheap stock price."
Read More: Cramer Says This Stock Ripe for Takeover
"There are so many worthwhile cats and dogs under the DST roof of this company there's no reason why it has to be kept in the 60's," said Cramer.
"I had thought that Furniture Brands, the maker of so many terrific kitchen and bath products would be a natural candidate for a merger when the restrictions for acquisition come off later this year," speculated Cramer. "Masco could be a likely acquirer solidifying dominance in the two most important categories for the housing comeback."
Bed Bath & Beyond
"Analysts constantly say Amazon's going to crush Bed, Bath & Beyond but the cash flow continues to be bountiful." And Cramer added the stock is cheap. In this case Cramer thinks the company could take itself private.
What's the bottom line?
"I think Hess is the beginning," said Cramer. "With the Dow and the S&P nearing all-time highs companies may soon take the future into their own hands and join in the M&A parade," said Cramer.
"Yep, managements, of Alliant Techsystems, Manitowoc, Johnson & Johnson, Hain, Deckers, Mine Safety Appliance, DST, Furniture Brands and Bed Bath & Beyond, don't just stand there, do something!"
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