This Day On The Street
Continue to site
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

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 - Get Report) 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 - Get Report), Alexion Pharmaceuticals (ALXN - Get Report), Allergan (AGN - Get Report), Rockwell Automation (ROC), Anadarko Petroleum (APC - Get Report), Abercrombie and Fitch (ANF - Get Report), Lorillard (LO), Northern Trust (NTRS - Get Report), and Mead Johnson (MJN - Get Report) stand out as the biggest names to watch.

Within the report, Goldman Sachs added RPX Corp. (RPXC - Get Report), Teradata (TDC - Get Report), Green Dot (GDOT - Get Report) and Red Hat (RHT - Get Report) 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ROC $79.20 0.00%
LO $71.40 -0.46%
RVBD $20.99 -0.05%
ALXN $161.08 0.00%
AGN $274.84 0.00%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs