This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Unexpected Deals Themes for 2012


NEW YORK ( TheStreet) -- In a year when mergers, divestitures and initial public offerings seemed on track for a sustained recovery, the second half proved to be a rude awakening. Barring any holiday mega-deals, data shows that deals markets are flat for 2011 as a result of a 22% drop in second half M&A, according to Dealogic.

But a M&A slowdown, political gridlock in the U.S., a European debt crisis and heightened bank risk, among other concerns won't dissuade companies from cutting 2012 deals, according to Ernst & Young. Following the release of its M&A outlook, Steve Krouskos the U.S. leader of E&Y's transaction advisory services team highlights five unexpected reasons why deals will pick up in 2012 -- TheStreet fills in stocks that analysts point to as potential M&A targets.

5. "Deal volumes will improve in 2012. The fundamentals will prevail over uncertainty."

Krouskos says that contrary to the direction of markets and economic growth in some of the world's largest economies - a continued slippage won't spill into C-suites. In a recent poll, Ernst & Young found that 81% of executives polled believed corporate earnings would either grow or stay at current levels in 2012. "There are a lot of strategic gaps to left fill," says Krouskos, who believes M&A will be an increasingly important way for companies to grow or streamline their operations.

Within M&A, Ernst & Young believes that hot sectors will continue to be power and utilities, healthcare, technology and financial services. It means that 2011 blockbuster deals like Kinder Morgan's (KMI) $21 billion purchase of El Paso (EP), Express Scripts' (ESRX) $29.1 billion purchase of Medco Health Solutions (MHS) and HP's (HPQ) $10.7 billion purchase of Autonomy may be a sign of things to come.

Within software, Deutsche Bank analysts point to Comscore (SCOR), LivePerson (LPSN), Ariba (ARBA), Concur Technologies (CNQR), NetSuite (N), Taleo (TLEO), The Ultimate Software Group (ULTI) and athenahealth (ATHN) as some potential targets for blue chips like Adobe (ADBE), Cisco (CSCO), IBM (IBM) and Microsoft (MSFT).

Meanwhile, Clayton Moran of The Benchmark Company points to takeover interest of data center companies like Rackspace (RAX ) and Internap (INAP) as potentially being acquired by a strategic telecom or IT company.

In an October report, Goldman Sachs analyst Robert D. Boroujerdi updated the firm's M&A Candidates Basket, called GSRHACQN that it calculates have a 15% chance of being taken over in the next 12 months,. Across many sectors, Riverbed Technologies (RVBD), NetApp (NTAP), Alexion Pharmaceuticals (ALXN), Allergan (AGN), Rockwell Automation (ROC), Anadarko Petroleum (APC), Abercrombie and Fitch (ANF), Lorillard (LO), Northern Trust (NTRS), and Mead Johnson (MJN) stand out as the biggest names to watch.

Within the report, Goldman Sachs added RPX Corp. (RPXC), Teradata (TDC), Green Dot (GDOT) and Red Hat (RHT) as new M&A picks. Companies like Motorola Mobility (MMI) , Savvis (SVVS) and Varian Semiconductor (VSEA) highlighted in previous reports were acquired in 2011.

1 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs