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Two Ways to Play: Merck and Millipore Kick Off M&A Monday


Strengthen your portfolio in good times and bad.

M&A Monday

German pharmaceutical giant Merck (MRK) said yesterday it has agreed to buy US biotech equipment-maker Millipore (MIL) for $7.2 billion.

According to the Wall Street Journal, the deal helps Merck expand its presence globally as well as diversify its line of businesses away from pharmaceuticals. Merck said it will pay $107 a share, representing a 13% premium to Millipore's closing price on Friday and a 50% premium to where the stock traded just a week earlier.

Merck said the acquisition will generate an annual cost savings of about $100 million within three years of the deal, which it expects to close in the back half of this year.

From the Bull Pen: Expect to see more of these transactions as companies flush with cash put that money to work. Should that happen, the Russell 2000 ETF (IWM) could see new highs. In the short term, bulls can set a sell stop below $61.30.

From the Bear Cave: Companies that haven't participated in any type of rally should be on the radar. While it's too late to short AT&T (T) right now, a bounce back to the 20-DMA ($25.20) or the second resistance level ($25.50) could provide one with a downside entry. Remember to always set a stop level.

For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.

A Quick Check Around the World

Asian trading closed with the Nikkei 0.45%, India 1.08%, Hang Seng 2.17%, Shanghai 1.18%, and Taiwan 1.90%.

Across the pond, we see the FTSE 0.20%, CAC 0.55%, DAX 1.07%,

As of 8:15 AM EST, S&P Futures are trading +3.250 to 1106.75. Nasdaq futures are +4.750 to 1823.25.

A Look at Commodities

Over in commodities, crude oil is +0.08 to 79.73 while gold is -3.600 to 1115.30 this morning. Silver is +0.004 to 16.525 and copper +0.0700 to 3.3540.

The dollar Index is -0.0550 to 80.8050.

On the Radar


08:30 Personal Income 0.4%cons.
08:30 Personal Spending 0.4% cons.
08:30 PCE Prices- Core 0.1% cons.
10:00 Construction Spending -0.6% cons.

Click here for the full trading radar.

Welcome back. Have a great weekend!
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No positions in stocks mentioned.

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