Considering valuations may be cheap, are we in the early phase of an M&A wave?
It seems deal activity is starting to pick up with cash rich companies only too willing to pay a premium for their acquisition.
For your consideration, IBM is in talks to buy Sun Microsystems for at least $6.5 billion in cash. That’s about $10 a share and nearly a 100% premium from the stock’s closing price on Tuesday, the day the offer was made public.
Also Pfizer is buying Wyeth at a 14% premium and Roche snapped up Genentech for a 9% premium.
Are more deals like these in the offing?
Howard Lanser, director of M&A At Robert Baird tells Fast Money he expects to see a slew of deals in healthcare. Why? Because he thinks the deals mentioned above will compel sector rivals to team up, if they want to stay competitive.
And he reveals on Fast Money that industrials will be the next sector to see an uptick in M&A. “We’ll see a merger of equals. It’s logical to think if both of your stocks are down 35% this is a good time to form a marriage, double the size of your business and position yourself for the upturn.”
On Wednesday's Fast Money, Pete Najarian said much the same thing. "United Technologies stopped their repurchase program because they want the cash to make acquisitions," he explained. "The industrial space has areas where people are looking to buy."
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Trader disclosure: On Mar. 20th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AA), (AAPL), (BAC), (EEM), (FXI), (TCK); Seymour's Firm Owns (PBR); Terranova Owns (KCE), (FXC), (XBI), (BRCM), (WYNN), (INTC), (JOYG), (DELL), (XOM), (IBM), (POT), (X), (JPM): Terranova Owns (COP) Calls; Terranova Owns (HESS) & (HESS) Calls; Terranova Owns (DIS) & (DIS) Calls; Terranova Owns (AMGN) & (AMGN) Calls; Macke Owns (GE), (SDS), (POT); Macke Is Short (BRK.b); Najarian Owns (C) Call Spread; Najarian Owns (GS) Call Spread; Najarian Owns (GD) Call Spread; Najarian Owns (MS) & (MS) Calls; Najarian Owns (POT) Call Spread; Najarian Owns (MSFT) & (MSFT) Calls; Najarian Owns (TGT) Call Spread; Najarian Owns (XHB) Call Spread