Few things excite Jim Cramer more than M&A. And after a string of mergers, he thinks investors may be looking at significant higher valuations, at least in certain areas of the market.
That's because Cramer says no investor knows an industry better than its leading players. And if big companies are willing to pay significant premiums to make an acquisition, Cramer takes it to mean that they see value that the Street has missed.
Examining Tyson's $63 per share bid for Hillshire Brands, which topped last week's $55 per share bid from Pilgrim's Pride, Cramer thinks other businesses in the same sector may be undervalued, too.
With many Street pros believing that Kraft's Oscar Mayer unit could be the next target of M&A, Cramer broke down the numbers. "I had come up with a $21 billion valuation for this one division,which I talked about on Friday's "Mad Money". But after Tyson's final bid for Hillshire, today, I now think my Oscar Mayer valuation is too low by a couple billion dollars."
And the phenomenon is hardly limited to the food space.