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

Cramer: The Baffling Disappearance of M&A

Editor's Note: This article was originally published at 6 a.m. EDT on Real Money on July 1. To see Jim Cramer's latest commentary as it's published, sign up for a free trial of Real Money.

NEW YORK ( Real Money) -- The mergers went and disappeared. Sure, Monday marks the beginning of an auction for Onyx Pharmaceuticals (ONXX), one of the best biotechs out there. This is a deal that will lead to huge value created for the shareholders of this amazing firm -- and maybe it will herald the beginning of a new wave of deals in a market starved for mergers and acquisitions.

Somehow, though, I don't think so. The Onyx deal, borne of the lack of growth at its initial suitor, Amgen (AMGN - Get Report), should be a wake-up call to all of the firms like Amgen out there: Get your act together, and find a company that can make your shareholders richer when you acquire it.

However, that doesn't seem to be the way of the world. In fact, it's the opposite. There's been this remarkable groupthink that acquisitions have led to failed enterprises, and that the best gains are happening via break-ups -- not by adding on to the institution.

But compare that negative impression with the reality that's before us. Last week, ConAgra (CAG) reported earnings, and it was a beautiful thing -- CEO Gary Rodkin's insistence on buying Ralcorp produced far more bottom-line benefit than anyone had thought, especially this early on in the consummation. ConAgra was able to break the gravitational pull of the 10-year Treasury bond, which had taken down many of the bond-market-equivalent stocks with its newly high yield. At ConAgra, the earnings were so strong that they allowed people to consider that more dividend boosts were on the horizon. That's how quickly this company has been able to pay down debt from the robust earnings.

We saw the same thing, on a smaller scale, in the packaged-goods business, when B&G Foods (BGS) bought Pirate's Booty. This was a large acquisition for an acquisitive company with a terrific track record in revitalizing older brands that previous ownership could no longer improve upon.

Or consider the amazing appreciation of Tenet Health (THC) on its acquisition of rival Vanguard Health Systems, or the huge run in the stock of Actavis (ACT) after it acquired Warner Chilcott in an all-stock deal.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

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
  • 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 serious 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

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
Real Money
Try it NOW

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


Chart of I:DJI
DOW 16,790.19 +13.76 0.08%
S&P 500 1,979.92 -7.13 -0.36%
NASDAQ 4,748.3610 -32.9030 -0.69%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs