The New Wave of Deal Making
In today’s Fast Money final call, with big deals being made in big Pharma, is this a one-sector phenomenon? Pete Najarian, co-founder of OptionMonster.com, doesn’t think so. He’s highlighting other sectors that are primed for some M&A action.
Najarian sees the deals in the pharmaceuticals as just the tip of the iceberg and expects the Bio-techs to be more active in the area of mergers and acquisitions. He notes that Gilead got involved with CV Therapeutics in a deal potentially worth over a billion dollars, and sees more potential on the horizon.
However, Najarian doesn’t see this as just a Pharma story anymore. With the news surrounding mark-to-market and with the financial sector getting their balance sheets back in order, he thinks we will see a higher probability of M&A action in the economy. However, he thinks the financial sector itself is less promising.
He also sees potential in the tech sector, and recommends keeping a close eye on the activity of those companies. For instance, Cisco recently raised capital, despite their strong capital position. Najarian sees this as an indication of potential acquisitions to come. Semiconductors have also had a big rally of recent, but the sector as a whole is still relatively devalued, he says. Taking into account large companies like Apple , who is also sitting on a healthy amount of cash, Najarian doesn’t rule out the possibility that the tech giant would make some moves in this undervalued market. With so much cash in tech, there is certainly real potential.
The energy sector is also a potential hotbed for big deals. With ExxonMobil in relatively good shape and sitting on $40 billion in cash, Najarian sees oversold conditions across the board potentially encouraging XOM looking to expand its operations in refining, natural gas or other operations. Its performance as compared to ConocoPhillips and Chevron makes ExxonMobil a likely candidate in Najarian’s view.
He also singled out United Technologies , after revising its guidance lower earlier this week, and slashing 11,600 jobs. The company also pulled back on a stock repurchase and stated that they were on the hunt for mergers and acquisitions later this year.
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CNBC.com with wires