MomentumOptionsTrading.com Midday Update for 5/29/14
M&A Activity Heats Up
I mentioned a few weeks ago Merger & Acquisitions could help the bulls power new highs into the summer and today’s action continues to give hints there will be more to come.
Apple’s (AAPL, $631.44, up $7.43) rumored deal to buy Beats is now official and could open the door to other deals for Internet services. The company announced after yesterday’s close it had inked a deal to acquire Beats Music, and Beats Electronics for $3 billion with co-founders, Jimmy Lovine and Dr. Dre, joining Apple as part of the deal.
Elsewhere, Tyson Foods (TSN, $43.58, up $2.83) has made a bid to acquire Hillshire Brands (HSH, $52.48, up $7.67) for $50 a share in an all cash deal. This tops the recent offer of $45 a share from Pilgrim’s Pride (PPC, $24.93, down $0.45) to acquire the company.
Adding fuel to the fire is Hillshire’s recently announced deal to acquire Pinnacle Foods (PF, $31.71, up $0.34) for $4.3 billion. This acquisition is expected to be completed by September with a $163 million breakup fee for Pinnacle Foods if Hillshire falls to follow through. Pinnacle Foods has said it will pay $141 million to Hillshire if it accepts a better offer.
Let the food wars begin.
Despite the flurry of M&A news, the market is still struggling with resistance.
The Dow is up 10 points to 16,643 while the S&P 500 is higher by 4 points to 1,914 (side note: the index has reached another all-time intraday high of 1,915.78). The Nasdaq is gaining 11 points to 4,236 and the Russell 2000 is advancing 3 points to 1,139.
I have updated the current trades so let’s go check the tape.