Cramer plays oil merger matchmaker

Tom Grill | Getty Images

Between the news that Halliburton is snapping up Baker Hughes, and Actavis is acquiring Cramer-fave Allergan, mergers are clearly back with a vengeance.

This has Jim Cramer's investment-banker brain gone wild playing matchmaker, and he has a shotgun wedding to reveal.

Specifically, he would like the oil refiner Marathon Petroleum to propose marriage to CST Brands, the chain of gas stations and convenience brands that was spun off by Valero last year.

"Here on 'Mad Money' we never speculate on takeovers unless the underlying fundamentals are sound, and when it comes to CST Brands … I think the fundamentals are excellent and the stock deserves to go higher even without a deal," Cramer said.

Detroit refinery of the Marathon Petroleum Corp.
Source: Marathon Petroleum Corp.

So why the heck would Cramer recommend a gas station company when the price of gasoline is so low?

Well, a decline in the price of fuel is actually good news for CST. This is because there is a lag between the time and price when CST buys gas and when they sell it to consumers at a markup. That's why the stock is up 22 percent in the past month.

Additionally when the price of fuel is low, consumers tend to spend more money at convenience stores. Even better news for CST.

With a strong balance sheet and a network of nearly 1,900 gas stations in the U.S. and Canada, Cramer can't wait to marry off the CST bride.

Now why the heck would CST be a good match for Marathon Petroleum?

Marathon has already done a similar deal, when its gas station chain Speedway acquired Hess Retail for $2.87 billion at the end of September. That deal proved to be a benefit for business when it expanded its footprint by 1,200 locations.

Ultimately, the merger would improve product placement for Marathon, just as it did with Hess when it increased capacity by 200,000 barrels a day. Cramer thinks that if given the chance, Marathon would bite at the chance to buy CST.

"Just like with Hess, there wouldn't be a lot of overlap, as most of CST's locations are in the Southwest, with 60 percent of its stores in Texas. At the same time, CST would be able to soak up more of Marathon Petroleum's gasoline production."

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Even if Marathon isn't interested, Cramer bets that someone else would be. CST could fit in nicely with a Sunoco or Susser at Energy Transfer Partners.

Cramer estimates that an acquirer would be willing to pay as much as $4.8 billion for CST at enterprise value, not market capitalization. That is a 26 percent premium to where the stock is trading currently. Booyah!

So if Marathon passes on the marriage, don't fret. Not only are there other suitors for CST, but Cramer still thinks that it has strong fundamentals, and could be a winner if added to your portfolio as a single bride.

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