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Hostile Takeover May be Stealth Bull Sign

Monday, 12 Dec 2011 | 6:25 PM ET

Martin Marietta Materials landed on the trader radar after the company made an aggressive move to acquire a rival.

The company, which produces construction aggregates like crushed stone, sand and gravel, made an unsolicited $5 billion offer to buy rival Vulcan Materials in an attempt to create the global leader in the industry.

Martin Marietta offered 0.5 share of its stock for each Vulcan share. As of Friday's close, the bid was worth $36.69 a share, a 9 percent premium to Vulcan's closing price of $33.55.

Finerman's Fine Print: MLM Gets Hostile
Fast Money trader, Karen Finerman takes a closer look at the hostile takeover attempt by Martin Marietta Materials for Vulcan Materials.

Martin Marietta CEO Ward Nye said that due to the fragile U.S. economy and continuing uncertainty on infrastructure spending, combining to form a larger company would be beneficial to both Vulcan and Martin Marietta.

Nye also said the deal would create cost savings of $200 million to $250 million per year and higher dividends for Vulcan shareholders.

What’s the trade?

”I wouldn’t buy either of these stocks right now,” says top trader Karen Finerman. "It’s unclear how long an anti-trust review would take or if Vulcan will roll over,” she says. "Wait on the sidelines."

However, if you’re looking at the big picture, “it’s very bullish,” adds Anthony Scaramucci

”When companies file hostile bids for other companies they see huge opportunities. In the case of these two companies it the infrastructure rebuild over the next 5 years.”

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Trader disclosure: On Dec 12, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour is long AAPL; Seymour is long BAC; Adami owns C; Adami owns GS; Adami owns MSFT; Adami owns INTC; Adami owns AGU; Adami owns NUC; Adami owns BTU; Terranova is long ; Terranova is long SU; Terranova is long CAT; Terranova is long CNI; Terranova is long LQD; Terranova is long MUB; Terranova is long IBM; Terranova is long EMC; Terranova is long SWN; Terranova is long SBUX; Finerman is long AAPL calls; Finerman is long BAC; Finerman is long GLW; Finerman’s firm is long AAPL; Finerman’s firms is long JPM; Finerman’s firm is short IBM calls; Finerman’s firm GLW; Nations is long SPY; Nations is long C

For James West
West is long gold

For Jim Flaws
Flaws owns GLW

For David Strasser
Janney Montgomery Scott is a market maker in the securities of BBY, and may at any time hold a long or short position in this security.

Janney Montgomery Scott may seek compensation for investment banking services from the subject company (ies) BBY security in the next 3 months.

The research analyst is compensated based on, in part, Janney Montgomery Scott's profitability, which includes its investment banking revenues.

For Chris Danely
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Texas Instruments within the past 12 months.

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Texas Instruments.

Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Texas Instruments.

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Texas Instruments.

Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Texas Instruments.

Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking Texas Instruments.

Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Texas Instruments.

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Texas Instruments.

For Macneil Curry
No disclosures

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