With all of the talk of acquisitions floating around for Salesforce and Yelp in the market lately, Jim Cramer decided to take a closer look at the potential massive value that could be unlocked. The secret to acquisition success lies in getting the most out of the target—it's just a matter of pulling the trigger.
"I get the proposed deal objections, but bear with me. In fact, before you get too negative let's propose a few more acquisitions," the "Mad Money" host said.
Cramer wondered why Exxon doesn't just go and buy father fracker EOG Resources and Apache, or maybe IBM could finally crush the competition in analytics and buy Tableau Software? Go for it!
The reason why all of these deals make sense to Cramer, is because he is reminded of how successful Actavis was when it bought Allergan. That deal looked pretty genius on Monday when Actavis' stock flew through the roof after reporting one of the biggest numbers of 2015.
As a refresher, in November 2014 Actavis bought Allergan for approximately $66 billion, or $219 a share. At the time, investors thought this was a completely ridiculous overpay for the company, especially considering that Allergan was just trading at $90 the year before.
Then Actavis bid on Valeant, making it the biggest acquisition of 2014. With these smart acquisitions, Cramer still thinks this is the cheapest big pharma company on Earth—and the run is far from over with Actavis.
"I mention Actavis because sometimes you have to do something bold to make your company hum and your stock fly," Cramer said.
So, then what value could be unlocked with additional acquisitions?
Cramer does not know what transpired with the now fizzled Microsoft or Oracle buy of Salesforce, because CEO Marc Benioff cannot comment on these things. However, Cramer does know what both Oracle and Microsoft have expressed desire to boost their presence in the cloud area.
The way to do that would be to acquire Salesforce, which dominates the cloud space. Granted, both companies would have to pay a ton of money for it, the same way that Actavis paid for Allergan, but Salesforce is already worth $46 billion. However Cramer knows that Microsoft's CEO Satya Nadella has a great working relationship with Benioff, and while the analysts probably would hate the deal, Microsoft has said that it wants in on the cloud game.
It would be worth it.
How about IBM and Tableau Software? IBM wants to dominate the data analytics space, and Tableau is growing quickly in that area. However IBM doesn't want to do a big deal, and Tableau may not be up for sale. So, perhaps the better deal would be for IBM to buy Qlik Technologies for $4 billion to $5 billion. It could change the game for IBM in a heartbeat.
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Finally, with all of the recent consolidation in the oil patch, would it make sense for Exxon to buy EOG? Sure, why not? Exxon needs something bigger on its hands, and Cramer thinks a big company like EOG or Apache could really drive strong production growth.
After all, any of these potential acquirers could be the next Actavis. It's just a matter of one of the big dogs making a bold move to move the needle on their stock.
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