5 Most M&A Crazy Companies Since the Financial Crisis

NEW YORK ( TheStreet) -- When markets ground to a halt three years ago some businesses pulled their investments or folded. But others saw the crisis as a long term growth opportunity.

While markets can turn to from bull to a bear on a dime, data shows that those who continued to make acquisitions during the crisis have bolstered their businesses and, sometimes, share prices.
Since the crisis, Warren Buffett's led the way in takeovers - even if some have failed.

Though the S&P 500 Index is literally exactly where it was the Friday before Lehman Brothers collapsed in September 2008 -- at 1251 points --the earnings from the continuing operations of companies within the composite index are now 20% greater over that time frame, according to data compiled by Bloomberg.

For companies looking for earnings growth, the data is a simple signal that even if stock prices, unemployment and GDP cast a cloud on our economic outlook, companies bold enough to invest through the uncertainty of the past few years may reap gains, if they haven't already.

TheStreet did a screen of the most acquisitive companies since the crisis and picked a few big investing winners, using Bloomberg data. While some companies like Pfizer ( PFE) did one-off mega mergers like its $60 billion plus Wyeth buyout, we focused on the companies who went to the deal well with frequency to drum up growth during tight times.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Berkshire Hathaway ( BRK.B)

It won't surprise many that Warren Buffett's Berkshire Hathaway has been active in the takeover arena. Berkshire made investments in Goldman Sachs ( GS), General Electric ( GE) and Bank of America ( BAC) as they faced crisis -- and announced a $10.7 billion holding of IBM ( IBM) on Monday.

Berkshire Hathaway has been the biggest investor buying $48.4 billion worth of companies over $250 million in size since the crisis erupted in September 2008, according to Bloomberg data. Its biggest purchase, railroad Burlington Northern Santa Fe, has added over $15 billion in sales to Berkshire's overall revenue of $136.2 billion and is, as of 2010, the most profitable wholly owned company within the investments behemoth.

Berkshire's also made big acquisitions in a chemicals company Lubrizol for $ 9 billion and in an aircraft lease company Wesco Financial. Not all Buffett bids have been so clean. In December 2008, Constellation Energy ( CEG) cancelled a $9 billion Berkshire buyout in favor of a deal with Electricite de France. After that deal fell through, Constellation was later bought by Exelon ( EXC) for $7.9 billion in April of this year, however the deal has come under regulatory scrutiny and isn't complete. This fall, re-insurer Transatlantic Re also rebuffed a $3.25 billion bid by Berkshire.

Overall, deal making propelled Berkshire to record one of its best years in profits and revenue in 2010, however shares are down nearly 6% year-to-date and are well below pre-crisis highs.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Johnson & Johnson ( JNJ)

In April, Johnson & Johnson bought medical device maker Synthes for $21.3 billion in the biggest merger in its 125 year history. The purchase added to a run of eight other crisis-time acquisitions over $250 million in size that's brought its deals total to $25.2 billion.

With Synthes, Johnson & Johnson took over a high quality maker of medical devices like screws and bone grafts, bolstering a health products unit that has recalled over 50 products since 2010, according to Bloomberg reports. Currently, J&J is the second largest maker of health products to Pfizer.

While J&J's underperformed its drug and medical products competitor, gaining just 5% year-to-date compared with Pfizer's 13% return, the company's shares are only down 10% from its pre-crisis highs in contrast to Pfizer's near 30% loss. Even after the deal, Moody's maintained J&J's AAA rating.

In total both Pfizer, with its $68 billion acquisition of Wyeth and Merck's ( MRK) $41 billion takeover of Schering-Plough in 2009 have cut larger deals than J&J, but neither has bought many other companies. In 2010, Merck ended an $8.2 billion animal health services joint venture with Sanofi Aventis ( SNY) over complications to the deal like divestitures.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

United Technologies ( UTX)

Through $21.6 in deal making, United Technologies has moved from being diversified to ultra-diversified. In September, United Technologies did its biggest ever merger buying plane landing gear and aerospace equipment maker Goodrich ( GR) for $18.4 billion to bolster its Hamilton Sundstrand engines divisions.

Through deals in recent years, the company is trying to diversify its businesses that already contains Carrier air conditioners, Otis elevators and UTC Power, and a specialty in aerospace with Hamilton Sundstrand airplane systems, Pratt & Whitney aircraft engines and Sikorsky helicopters.

Overall, deal like the Goodrich purchase and a buyout of a joint venture with Rolls Royce are bolstering United Technologies' commercial aircraft sales. With Goodrich and its Rolls Royce partnership added, United Technologies' Pratt & Whitney plane engines division may soon become its largest revenue source, while its Hamilton Sundstrand aerospace division may become company's fourth largest division, leapfrogging UTX Fire & Safety and Sikorsky.

After a steep fall in the crisis, United Technologies' stock reached all-time highs above $90 a share this July as profits accelerated. A recent surge in both Boeing ( BA) and Airbus plane orders prove that commercial airlines are looking to upgrade their fleets, signaling that United Technologies is positioning itself well.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Hewlett Packard ( HPQ)

No one can dispute that within Silicon Valley, Hewlett Packard's been on a big buying spree in recent years -- the big question is whether it's been a boost to the company. In October, HP took a majority stake in British software giant Autonomy at a cost of $10.3 billion in the company's second largest merger ever to its $25 billion deal for Compaq in 2001. Shares however have fallen 35% year-to-date.

HP's most recent Autonomy purchase is a legacy of former chief executive Leo Apotheker, who in August, planned the Autonomy purchase and a spin of the Palo Alto, Ca., -based company's PC's business to tip the balance of sales to a services and software orient. Apotheker was fired in September and replaced by Meg Whitman, who's completed the Autonomy purchase but quashed a PC's spin.

Nevertheless, HP's been on the deals hunt long before its Autonomy purchase. Overall, it cut five other $250 million sized deals, adding to a merger bill of $17.7 billion. In the spring of 2010, HP purchased 3Com for $2.7 billion to bolster its networking business, and later it bought Palm for $1.2 billion to sell handsets and leverage its webOS platform. In the summer, the company bought Fortify, a software security company that helps users connect to mobile devices using a firewall. That fall, the company paid $2.35 billion for 3Par's storage capabilities and $1.5 billion for ArcSight in a push to security services.

As a result of the deals, HP's Technology Solutions group is growing at a 13.4% in the last two years, its fastest growing business. After keeping the PC's division, Whitman must now work to integrate the company's businesses with more than $126 billion in sales to build on its 7% profit margins.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Pepsi ( PEP)

Since the crisis, Pepsi's made it a priority to buy back its U.S. supply chain in deals valued at $14 billion, adding to other takeovers for a total of $19.4 billion. In August 2009, Pepsi bought back the stakes in its Pepsi Bottling and PepsiAmerica's divisions previously spun through IPO's. After first bids by Pepsi were rejected for being too low, a price increase made the buybacks go through. In 2010, Pepsi reported a doubling of revenue in its North American beverages unit to $20.4 billion and it saw overall revenue grow by a third to $57.8 billion, bolstered by its bottling operations.

After previous mergers like Pepsi's $3.3 billion buy of Tropicana in 1998 and its $13.4 billion Quaker purchase in 2001, the snacks, sodas, sports drinks and breakfast giant now has nineteen different product lines that with more than $1 billion in annual sales. In December 2010, Pepsi also took control of Wimm-Bill Dann in its largest international acquisition that makes the Purchase, NY -based company the biggest foods seller in Russia.

Written by Antoine Gara in New York.

If you liked this article you might like

Amazon Could Rise Another 18% From Here -- Bonus White Paper
Tune In the 'Trade Channel' on SiriusXM

Tune In the 'Trade Channel' on SiriusXM

Cardinal Health: Why We're Not Worried About Amazon

Cardinal Health: Why We're Not Worried About Amazon

Why I'm Holding on to Biglari Holdings

Why I'm Holding on to Biglari Holdings

Stocks Pounded as Bond Yields Rise Before $260 Billion Treasury Auction Bonanza

Stocks Pounded as Bond Yields Rise Before $260 Billion Treasury Auction Bonanza