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Two Ways to Play: Warren Buffett's Sugar High


Mars' Wrigley buyout could create world's largest candy maker, opportunity.

Today's session was dominated by M&A news. Mars and friend of Mars, billionaire investor Warren Buffett, agreed to buy Wrigley (WWY) for $23 billion. The transaction would create the world's largest candy maker. Mars said it would pay $80 per share for WWY, a 28% premium to Friday's closing price. WWY surged 23% on the day to settle at $77.75.

Elsewhere, Microsoft (MSFT) shares were beat up today after Yahoo (YHOO) let Saturday's deadline pass. In January, Microsoft offered over $40 billion to take over Yahoo. Now Microsoft must decide whether to walk away or start one of the largest take-over battles in corporate history.

Kirk Kerkorian and his investment company, Tracinda Corporation, disclosed a 4.7% stake in Ford (F) and offered to buy 20 million more shares for $8.50 a share, a 13% premium to Friday's close. The stake would bring his total to $5.6% and the news sent Ford's stock surging up as much as 10%.

Feel free to check out Todd's comments in Monday Morning Quarterback.

From the Bull Pen:

A number of other candy makers rose in sentiment on the Wrigley buy-out such as Tootsie Roll (TR), Hershey Company (HSY), and Cadbury Schweppes (CSG). Although the takeover possibility is a stretch, bulls might continue to look to these stocks as they sit in a favorable space given the overall macro concerns.

MSFT dropped 3% in today's session. The sell-off seemed overdone to a number of professors at the 'Ville. Professor Quint Tatro mentioned sell-stops on a clear break of $28.00.

From the Bear Cave:

General Motors (GM) jumped as much as 3% in today's session on the Tracinda/Ford news. Yet nothing about the company's business has changed and its challenges in a slowing economy still remain. Bears are eying the $25 level on GM as a downside entry, if and when the stock approaches that level.
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No positions in stocks mentioned.

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