Yahoo Finance Are M&As Helping U.S. Markets Amid Trade War Fears?
On Sep 24, U.S. markets felt the impact of a deal-making spree that saw a spate of big-ticket mergers and acquisitions. The biggest of them certainly was Comcast Corporation’s CMCSA $38.8 billion acquisition of British broadcaster Sky plc SKYAY, beating U.S. rival Twenty-First Century Fox, Inc. FOXA. Moreover, Sirius XM Holdings, Inc. SIRI also agreed to buy Pandora Media, Inc. P, while Barrick Gold Corporation ABX agreed to buy Randgold Resources Limited GOLD for $6 billion in stock.
This year so far has already seen quite a few big acquisitions, which is helping the broader market. Understandably, companies are defying trade war fears and uncertainty around U.S. mid-term elections, and going for mergers and acquisitions. Moreover, U.S. companies are taking advantage of the cheap pound to acquire some of U.K.’s biggest businesses. According to data compiled by Thomson Reuters, a record $2.5 trillion in mergers and acquisitions were announced in the first half of 2018.
Comcast, Sirrus, Barrick Gold Take the Acquisition Route
NBCUniversal parent Comcast finally won a $38.8 billion bid for British Broadcaster Sky in a weekend auction. The U.S. cable giant has been eyeing Sky ever since it dropped out on the $71 billion bidding war with The Walt Disney Company DIS for Fox’s television and studio assets. This acquisition now will definitely strengthen Comcast’s foothold in original content creation at a time when streaming giants like Netflix, Inc. NFLX and Amazon, Inc. AMZN are giving competition to media companies.
On Sep 24, Sirius announced that it will buy Pandora in a stock deal valued at $3.5 billion. This, undoubtedly, will be a big leap for Sirius. The merger will see the largest satellite radio service in the United States with one of the largest online music streaming companies. The acquisition will immediately give Sirius a wider customer base outside the car, a priority for companies that use satellites to deliver their content. Sirius will now get 70 million customers of Pandora.
The same day, Barrick Gold agreed to buy Rangold Resources for $6 billion in an all-stock deal. This will make the combined entity the world’s largest gold company by production, with a market cap of $18.3 billion.
Record M&As in 2018
Michael Kors Holdings Limited KORS is reportedly closing in on a $2.35 billion deal to buy Gianni Versace SpA. Despite trade war fears, record stock prices and cheap debt seem to be giving companies the confidence for more mergers and acquisitions. This has helped global deal making touch a record high of $3.2 trillion in 2018, reflecting an increase of 40% from the year-ago period, per Thomson Reuters. Michael Kors has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Moreover, deals worth more than $5 billion accounted for 44% of the transactions this year. Interestingly, big acquisitions in media and health care have been driving market activity this year. Apart from Disney and Comcast, this year also saw AT&T, Inc.’s (T) $85.4 billion acquisition of Time Warner.
In healthcare, pharmacy chain CVS Health Corporation CVS announced a $69 billion merger with health insurer Atena.
Cross Border Deals Helping Markets
The increase in mergers and acquisitions are taking place against the backdrop of a healthy economic outlook. The U.S. economy is on solid ground, giving companies the confidence to expand and explore newer markets. Moreover, U.S. companies are also taking advantage of a cheap pound and buying a lot of U.K. firms.
Cross-border deals have accounted for the majority of activity this year. Cross-border mergers and acquisitions have totaled $1.3 trillion this year, two-third higher than 2017 and recording the strongest period since 2007. Moreover, rising completion is making a number of companies reshuffle their product line and expand their portfolio. That said, mergers are on the rise despite increasing global trade tensions.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Walt Disney Company (DIS) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Pandora Media, Inc. (P) : Free Stock Analysis Report
Sirius XM Holdings Inc. (SIRI) : Free Stock Analysis Report
British Sky Broadcasting Group PLC (SKYAY) : Free Stock Analysis Report
Comcast Corporation (CMCSA) : Free Stock Analysis Report
Barrick Gold Corporation (ABX) : Free Stock Analysis Report
Randgold Resources Limited (GOLD) : Free Stock Analysis Report
Twenty-First Century Fox, Inc. (FOXA) : Free Stock Analysis Report
CVS Health Corporation (CVS) : Free Stock Analysis Report
Michael Kors Holdings Limited (KORS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
