Two Ways To Play: Monday's M&A Train
Strengthen your portfolio in good times and bad.
Bloomberg reports Bunge (BG) has agreed to buy Corn Products International (CPO). The world's largest oilseed processor will pay the equivalent of $56 for each share of CPO. The deal represents a 31% increase to CPO's closing price on Friday.
Bunge CEO Alberto Weisser said the acquisition will add higher-margin starch and sweetener products in addition to expanding the company's operations and diversifying its revenue stream. Professor Andrew Jeffery mentioned these companies recently in Biofuel Debate Rages On.
From the Bull Pen: Bulls feel this is a good move for BG. Trades below $118 (50 DMA) may act as a near-term sell-stop.
From the Bear Cave: Bears can play the downside in Hormel (HRL); trades above $37 may act as a near-term buy-stop.
Republic Services (RSG) has agreed to buy Allied Waste Industries (AW). According to Bloomberg, the third largest North American trash hauler agreed to buy AW for approximately $6.07 billion. The deal, which is expected to close in the fourth quarter, would create a company with operations in 40 U.S. states and bring in about $9 billion in annual revenue.
AW shareholders will receive 0.45 share of Republic stock for each share they hold, which gives AW approximately a 17% premium to Friday's closing price. Republic said in a statement the deal will provide an estimated $1.7 bln in annual cash flow which it will use to invest in the business, fund its dividend, and reduce debt.
From the Bull Pen: Those bullish on the long-term prospects for RSG may fade (read: buy) as it approaches the $30 level. Another alternative is Waste Management (WMI); sell-stops near the 50 DMA ($36.80) may be an option.
From the Bear Cave: Bears looking for a related downside play might see one in Stericycle (SRCL); Buy-stops can be set above the 200 DMA ($55.65).
For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.
Quick Check Around the World
Asian trading closed in the red with the Hang Seng -0.13%, Nikkei -0.61%, Sensex -1.91%, Taiwan -0.33% and Shanghai -2.52%.
Europe is skewed to the upside with the CAC +0.24%, DAX +0.51%, FTSE +0.71%
As of 8:50 AM, S&P Futures are up +6.70 points to 1325, and Nasdaq Futures are higher +8.25 points to 1949.
A Look At Commodities
In commodities, crude oil is higher +1.06 to 136.77. Gold is lower -22.20 to 881.00. Silver is down -0.102 to 17.295. and copper is up +5.45 to 383.20.
The dollar index is higher +0.470 to 73.502.
On the Radar
Is it the calm before the storm? No events on the radar today but check out the action for the rest of the week. Click here for the full trading radar.
Happy Monday! Good luck!
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