The Urge to Merge
With the urge to merge running rampant on Wall Street, Cramer said it's worth while to talk about a merger that failed to happen -- the merger of equals between ad giants Omnicom Group (OMC - Get Report) and the privately held Publicis.
Cramer said despite working on a deal since last summer, these two advertising Golaiths failed to come to terms and canceled their plans to merge. That may be bad news for Omnicom, he added, but it's great news for Interpublic Group (IPG - Get Report), the number four player in the ad space.
Cramer explained that in the increasingly competitive advertising arena, Omnicom and Publicis were desperate to merge and increase their scale. So if they can't buy each other, why not buy Interpublic -- which is not only a cash cow but small enough to easily acquire.Cramer reminded viewers that he never recommends a stock on a takeover basis alone. Interpublic also has terrific fundamentals. The company has instituted a successful turnaround, has a 1.9% yield and a $300 million stock buyback program. Shares trade at a scant 16.5 times earnings, but Cramer said it's likely worth 20 times earnings in a takeover scenario.