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Are M&As the Secret Mantra Propelling US Markets' Bull-Run?
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U.S. markets are enjoying their record bull-run defying trade war fears, thanks to an increasing number of mergers and acquisitions that is reflecting the high level of confidence of business leaders. This year so far has already seen quite a few big acquisitions, which is helping the broader market. According to data compiled by Thomson Reuters, a record $2.5 trillion in mergers and acquisitions were announced in the first half of 2018.
The latest to jump the bandwagon is PepsiCo, Inc. (PEP - Free Report) and Tyson Foods, Inc. (TSN - Free Report) . On Aug 20, PepsiCo announced plans of buying SodaStream International Ltd. for $3.2 billion. The same day, Tyson Foods also announced that it would be acquiring Keystone Foods for $2.16 billion.
Given the bullish economic outlook, robust corporate earnings and interest rates still remaining low in the United States, companies are going for mergers for future growth. This definitely is a good sign for the broader market that is poised to benefit in the long term.
PepsiCo, Tyson Take the Acquisition Route
On Aug 20, PepsiCo, announced plans of acquiring Israeli at-home carbonated drink maker SodaStream for $3.2 billion. The acquisition will help PepsiCo to reach out to customers in their homes instead of stores. PepsiCo has been struggling in the United States with an increasing number of consumers shunning sugary drinks.
The SodaStream acquisition will double PepsiCo’s drinks business and is being seen as a big leap by the company in recent years. Shares of Soda Stream surged 9.4% on Monday, while PepsiCo declined 0.9%. Year to date, shares of Soda Stream have surged 104.4%. SodaStream sports a Zacks Rank 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The same day, Tyson Foods too announced that it would be buying Keystone Foods for $2.16 billion. Tyson is the largest meat supplier, while Keystone supplies meat protein to fast food restaurants and stores, including chicken nuggets to McDonald’s Corporation (MCD - Free Report) . With this acquisition, Tyson will try to increase its global reach.
It goes without saying that these acquisitions are being made with the sole objective to expand market base by reaching out to more customers. At the same time, it is helping companies to diversify their product portfolio and explore newer avenues.
M&As Increase in 2018
More than $2.5 trillion in mergers and acquisitions were announced in the first half of 2018, up 61% from the year-ago period, per Thompson Reuters. This puts mergers in 2018 on track to cross $5 trillion, which would surpass 2015 as the largest ever total in a year on record.
Interestingly, big acquisitions in media and health care have been driving the activity this year. Year to date, the value of announced media deals have touched $323 billion, an increase of 440% from a year ago.
The Walt Disney Company (DIS - Free Report) is leading the race with a $71.3 billion buyout deal for Twenty-First Century Fox, Inc. (FOXA - Free Report) . Earlier, Comcast Corporation (CMCSA - Free Report) had placed a $65 billion bid for Fox’s studio, television and sports assets after having bid $30.7 billion for Sky plc’s takeover. This year also saw AT&T, Inc.’s (T) $85.4 billion acquisition of Time Warner. Year to date, shares of Twenty-First Century Fox have surged 24.2%.
In healthcare, pharmacy chain, CVS Health Corporation (CVS - Free Report) announced a $69 billion merger with health insurer Atena. Also, e-commerce giants like Amazon.com (AMZN - Free Report) are making the journey difficult for brick and mortar stores.
M&As Help Boost Market
The increase in mergers and acquisitions are taking place against a healthy economic outlook. The U.S. economy is on solid ground that is giving confidence to companies to expand and explore newer markets.
Moreover, rising completion is making a number of companies to reshuffle their product line and expand their portfolio. That said, mergers are on the rise despite increasing global trade tensions. Cross-border acquisitions have cross more than $1 trillion in the first half. This definitely is helping the broader market grow against the backdrop of a booming economy.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Are M&As the Secret Mantra Propelling US Markets' Bull-Run?
U.S. markets are enjoying their record bull-run defying trade war fears, thanks to an increasing number of mergers and acquisitions that is reflecting the high level of confidence of business leaders. This year so far has already seen quite a few big acquisitions, which is helping the broader market. According to data compiled by Thomson Reuters, a record $2.5 trillion in mergers and acquisitions were announced in the first half of 2018.
The latest to jump the bandwagon is PepsiCo, Inc. (PEP - Free Report) and Tyson Foods, Inc. (TSN - Free Report) . On Aug 20, PepsiCo announced plans of buying SodaStream International Ltd. for $3.2 billion. The same day, Tyson Foods also announced that it would be acquiring Keystone Foods for $2.16 billion.
Given the bullish economic outlook, robust corporate earnings and interest rates still remaining low in the United States, companies are going for mergers for future growth. This definitely is a good sign for the broader market that is poised to benefit in the long term.
PepsiCo, Tyson Take the Acquisition Route
On Aug 20, PepsiCo, announced plans of acquiring Israeli at-home carbonated drink maker SodaStream for $3.2 billion. The acquisition will help PepsiCo to reach out to customers in their homes instead of stores. PepsiCo has been struggling in the United States with an increasing number of consumers shunning sugary drinks.
The SodaStream acquisition will double PepsiCo’s drinks business and is being seen as a big leap by the company in recent years. Shares of Soda Stream surged 9.4% on Monday, while PepsiCo declined 0.9%. Year to date, shares of Soda Stream have surged 104.4%. SodaStream sports a Zacks Rank 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The same day, Tyson Foods too announced that it would be buying Keystone Foods for $2.16 billion. Tyson is the largest meat supplier, while Keystone supplies meat protein to fast food restaurants and stores, including chicken nuggets to McDonald’s Corporation (MCD - Free Report) . With this acquisition, Tyson will try to increase its global reach.
It goes without saying that these acquisitions are being made with the sole objective to expand market base by reaching out to more customers. At the same time, it is helping companies to diversify their product portfolio and explore newer avenues.
M&As Increase in 2018
More than $2.5 trillion in mergers and acquisitions were announced in the first half of 2018, up 61% from the year-ago period, per Thompson Reuters. This puts mergers in 2018 on track to cross $5 trillion, which would surpass 2015 as the largest ever total in a year on record.
Interestingly, big acquisitions in media and health care have been driving the activity this year. Year to date, the value of announced media deals have touched $323 billion, an increase of 440% from a year ago.
The Walt Disney Company (DIS - Free Report) is leading the race with a $71.3 billion buyout deal for Twenty-First Century Fox, Inc. (FOXA - Free Report) . Earlier, Comcast Corporation (CMCSA - Free Report) had placed a $65 billion bid for Fox’s studio, television and sports assets after having bid $30.7 billion for Sky plc’s takeover. This year also saw AT&T, Inc.’s (T) $85.4 billion acquisition of Time Warner. Year to date, shares of Twenty-First Century Fox have surged 24.2%.
In healthcare, pharmacy chain, CVS Health Corporation (CVS - Free Report) announced a $69 billion merger with health insurer Atena. Also, e-commerce giants like Amazon.com (AMZN - Free Report) are making the journey difficult for brick and mortar stores.
M&As Help Boost Market
The increase in mergers and acquisitions are taking place against a healthy economic outlook. The U.S. economy is on solid ground that is giving confidence to companies to expand and explore newer markets.
Moreover, rising completion is making a number of companies to reshuffle their product line and expand their portfolio. That said, mergers are on the rise despite increasing global trade tensions. Cross-border acquisitions have cross more than $1 trillion in the first half. This definitely is helping the broader market grow against the backdrop of a booming economy.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>