We often look at the stock market in terms of a whole, with success or failure being tracked as indexes rather than individual stocks. The reality for most investors is that their stocks will be diversified across different indexes and sectors, so sometimes it is the smaller stories that are more important than the high-level numbers. This has been evident with two potential mergers in the works, both of which are sending prices up, benefiting stock investors in all of the companies concerned.
KKR & Co. Planning Envision Healthcare Corp. Acquisition
KKR & Co. (NYSE: KKR) is getting closer to a deal to purchase Envision Healthcare Corp. (NYSE: EVHC) for more than $5.5 billion.
The buyout has sent stock of both companies climbing, as investors are confident that they will profit, no matter which side of the acquisition they are on. This would be one of the most significant private equity buyouts in recent history, and the deal itself is worth closer to $10 billion (with debt included).
This deal could be announced in the coming hours, or at least sometime this week. Price increases may be partially attributed to late buys by opportunistic investors wanting to be part of the action if the acquisition goes through.
KKR & Co. is a strong investment management firm, and the acquisition of Envision Healthcare Corp. would further strengthen their health services portfolio.
KKR stock is up 2.2% as of Monday morning, while EVHC has climbed by 1.56%.
Comcast Planning Bid for FOX Assets
Another potential merger has shareholders confident, this time with two companies that crossover in the technology, entertainment, and media industries.
It has been rumored that Comcast (NASDAQ: CMCSA) will make a bid for FOX (NASDAQ: FOX) assets, depending on the outcome of a pending court case blocking an unrelated deal between Time Warner and AT&T. The Department of Justice is blocking that particular merger based on antitrust issues.
Comcast is reportedly interested in buying FOX assets for $60 billion in cash, which would be worth more than the current $52 billion stock-only offer that Disney has made.
The result of the AT&T and Time Warner court case will be critical, because it will set a legal precedent for an ISP/technology company acquiring a high-profile media company.
On Monday, CMCSA stock went up .25%, while FOX went up .82%.
Mergers and Acquisitions Can Benefit Shareholders
Successful mergers and acquisitions can benefit shareholders and create significant returns. News like this only reinforces the fact that diversification is important, and it’s a timely reminder that even some of the most unexpected stocks can generate significant gains based on big business decisions.
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