Jim Cramer, the host of Mad Money, recently highlighted a surge in merger activity, pointing out that we’ve seen a significant uptick in deals over the past few days. He explained that this wave of mergers and acquisitions aligns with what he’s been predicting, a shift in M&A activity due to the change in administration.
Cramer noted that under the Biden administration, the Federal Trade Commission (FTC) and the Justice Department’s antitrust division have been very strict on mergers, often taking an aggressive stance against any form of corporate consolidation. According to Cramer, companies had grown increasingly reluctant to pursue mergers under Biden’s regulatory approach, as they faced the uncertainty of lengthy court battles with little assurance of success.
“And that’s why when Trump won in November, it became very obvious that we were looking at a deluge of M&A deals and these companies couldn’t even bring themselves to wait for inauguration day.”
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“Alright, so what do we make of this wave of deals? First, I gotta say, it’s just nice to see some mergers again and while this deluge was widely anticipated because of the change in administrations, it’s still good to see some confirmation.”
Cramer said it made him more confident in predicting that M&A deals will continue to increase, which is one reason why he recently added Goldman Sachs stock to his Charitable Trust portfolio as it has a major M&A advisory business that had been relatively dormant under the previous administration. He urged investors to consider buying the stock, noting that it’s an excellent opportunity.
More generally, Cramer expressed satisfaction in seeing so many companies once again pursuing mergers that make sense for their businesses. When examining the deals announced in early January, Cramer pointed out that while some of these deals might have faced challenges under Biden’s administration, most appear justifiable.
“So the bottom line: Gotta tell you, I’m just glad we’re back to a place where reasonable arguments like this will be considered fairly by the antitrust regulators rather than the situation we had under Biden where every takeover is considered anti-competitive until proven otherwise.
That’s very good news for the whole market, as lots of stocks will be going away. Given that we have so few IPOs, there won’t be a lot of new stock to replace it and a supply shortage, well, that is always good news for investors.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 8. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.
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Jim Cramer is Watching These 8 Stocks
8. Constellation Energy Corporation (NASDAQ:CEG)
Number of Hedge Fund Holders: 78
Cramer discussed the recent report surrounding Constellation Energy Corporation’s (NASDAQ:CEG) acquisition of Calpine Corp.
“And today we got a report out of Bloomberg that Constellation Energy, the incredibly red hot independent power producer with big nuclear exposure, is nearing a huge $30 billion deal to buy Calpine, that’s another major power generator that was taken private back in 2017… Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense.”
Constellation Energy (NASDAQ:CEG) is a U.S. energy company engaged in the generation and sale of electricity through a diverse mix of resources, including nuclear, wind, solar, natural gas, and hydroelectric power. On January 10, the company entered into a definitive agreement to acquire Calpine Corp. in a cash and stock deal valued at approximately $16.4 billion. The net purchase price, including cash generated by Calpine between the signing and closing date and the value of tax attributes, totals around $26.6 billion.
The acquisition will combine Constellation’s expertise in emissions-free electricity generation with Calpine’s low-emission natural gas and renewable energy assets, creating the largest clean energy provider in the U.S. The merger will allow Constellation to serve 2.5 million customers with an expanded range of energy solutions, including zero- and low-emission sources such as nuclear, natural gas, and geothermal.
Expected to close in the second half of 2025, the deal is projected to add $2 billion to Constellation Energy’s (NASDAQ:CEG) annual free cash flow, with significant increases in adjusted operating earnings per share (EPS), including an anticipated 20% accretion in 2026 and more than $2 per share in the years following the merger.
7. Cintas Corporation (NASDAQ:CTAS)
Number of Hedge Fund Holders: 48
Calling Cintas Corporation (NASDAQ:CTAS) his favorite, Cramer mentioned the company’s “hostile $5 billion-plus takeover” that was reported recently.
“Also, yesterday we learned that another Cramer fave, small business uniform rental provider, Cintas, although they do a lot of other stuff for a small business, was launching a hostile $5 billion-plus takeover attempt of UniFirst, which also specializes in workplace uniforms and protective clothing.”
Cramer commented that when reviewing the transactions that occurred at the beginning of January, he believed that while some might have faced opposition from regulators with an ideological stance under Biden’s administration, most of these deals appeared to be sound and reasonable. He emphasized that, in his view, all of them made solid business sense.
“The only proposed deal that I think might deserve some real antitrust scrutiny is the Cintas UniFirst tie up, which remember, isn’t even an official deal yet, it’s hostile… And even this one only raises eyebrows because Cintas and UniFirst mostly serve the same small business space. I don’t love the idea of squeezing any small businesses, okay? They get squeezed enough by the governments, especially if you’re talking about ingrained services like uniform rentals where there don’t seem to be that many options.
So I went to Todd Schneider, straight-shooting CEO of Cintas, about that idea. He gave us a very thoughtful response. He pointed out that they have all kinds of competition, businesses that can source their uniforms and safety equipment from Amazon, Grainger, Fastenal, or they can go to Walmart or Costco even. Schneider argued that by joining forces, Cintas and UniFirst would be able to provide better service to their clients. And even if they’re allowed to merge, they’d only be serving 2 million businesses out of 16 million total businesses in the US and Canada.”
Cramer mentioned that he had not considered the fact that Cintas is also in competition with major companies like Amazon, Costco, and Walmart to provide everyday supplies to small and medium-sized businesses. He acknowledged that this makes a lot of sense, and the market share figures certainly speak for themselves.
Cintas (NASDAQ:CTAS) provides corporate identity uniforms and related business services along with first aid, safety, and fire protection products and services. In the second quarter of fiscal 2025, the company made acquisitions totaling around $145 million.
In early January, the company made a move to acquire UniFirst Corporation, submitting a proposal to acquire all outstanding shares of UniFirst at $275 per share in cash. This offer, valued at approximately $5.3 billion, represented a 46% premium over UniFirst’s average closing price over the ninety-day average, as of January 6, 2025.
Despite multiple attempts by Cintas (NASDAQ:CTAS) to engage with UniFirst’s Board, UniFirst rejected the offer. The company expressed confidence in its standalone strategy, having previously turned down Cintas’ proposals in November and December after reviewing the offer and consulting with its major shareholders.
6. GFL Environmental Inc. (NYSE:GFL)
Number of Hedge Fund Holders: 32
Cramer mentioned GFL Environmental Inc.’s (NYSE:GFL) sale of its majority stake in its Environmental Services business.
“Yesterday, a waste management company called GFL Environmental announced that it’s selling the majority of its environmental services business to a pair of private equity firms for over $6 billion… Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense.”
GFL Environmental (NYSE:GFL) provides non-hazardous solid waste management and environmental services in Canada and the United States, including collection, transportation, recycling, disposal, liquid waste management, and soil remediation. Recently, it announced that it had entered into a definitive agreement to sell its Environmental Services business for an enterprise value of $8.0 billion. As part of the deal, the company will retain a $1.7 billion equity interest in the business and expects to receive approximately $6.2 billion in cash proceeds after accounting for the retained equity and taxes.
As per Reuters, the transaction follows months of pressure from activist group ADW Capital Management, which had urged GFL to divest its environmental solutions business and focus solely on waste management. The company plans to use up to $3.75 billion of the net proceeds from the deal to reduce debt, with up to $2.25 billion allocated for share repurchases. Following the debt repayment, it expects its net leverage to stand at 3.0x.
CEO Patrick Dovigi stated that the transaction will significantly strengthen the company’s balance sheet, moving it closer to achieving an investment-grade credit rating. Additionally, GFL Environmental (NYSE:GFL) has the option to repurchase the Environmental Services business within five years of the deal’s expected close in the first quarter of 2025, which will also lead to a reduction in its cash interest expenses by approximately C$200 million.
5. Phillips 66 (NYSE:PSX)
Number of Hedge Fund Holders: 39
Discussing Phillips 66 (NYSE:PSX) during the episode, Cramer said:
“And listen, that’s not even an exhaustive list of M&A activity this week. Well, on Monday, Phillips 66 announced a deal to acquire certain privately held natural gas infrastructure assets for over $2 billion… Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense…”
Phillips 66 (NYSE:PSX) is an energy manufacturing and logistics company that operates internationally, involved in the transportation, storage, refining, and marketing of petroleum products, as well as the production and sale of chemicals. On January 6, it announced that it had entered into an agreement to acquire EPIC Y-Grade GP, LLC and EPIC Y-Grade, LP for $2.2 billion in cash. These entities own subsidiaries and assets, including long-haul natural gas liquids (NGL) pipelines, fractionation facilities, and distribution systems. This transaction is expected to immediately increase earnings per share once it closes.
The company has focused significantly on expanding its NGL capabilities as it expects that NGL output will surpass crude oil production growth by the end of the decade, driven by strong demand from petrochemical manufacturers. CEO Mark Lashier commented that the acquisition optimizes the company’s Permian NGL value chain and will improve its ability to provide comprehensive flow assurance to producers.
He added that the deal is expected to generate returns that exceed the company’s hurdle rates. Despite the acquisition, Phillips 66 (NYSE:PSX) does not expect to increase its 2025 capital program, even as EPIC NGL works to expand its pipeline capacity.
4. Paychex, Inc. (NASDAQ:PAYX)
Number of Hedge Fund Holders: 20
Cramer expressed fondness for Paychex, Inc. (NASDAQ:PAYX) and discussed its acquisition of Paycor HCM, Inc.
“Then a little later on Tuesday morning, Cramer fave Paychex, the payroll processor and payer and provider of outsourced human capital management solutions, announced that it’s acquiring rival software vendor Paycor HCM for $4.1 billion. I like this Paycor. Again, they’re rolling up the human capital management software space and Paycor gives them additional scale to broaden their offerings… Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense…
Paychex is also gaining scale in the industry with the Paycor HCM deal. I suspect that Biden administrators, this one could draw some antitrust attention. They’re going to take a good hard look at this deal, but I can’t see why this kind of takeover should be blocked.”
Paychex (NASDAQ:PAYX) is a provider of integrated human capital management solutions, offering services such as payroll, HR, benefits, insurance, and retirement plan administration, primarily targeting small to medium-sized businesses. On January 7, the company announced a definitive agreement to acquire Paycor HCM, Inc. in an all-cash transaction valued at $4.1 billion, or $22.50 per share.
According to CEO John Gibson, the acquisition of Paycor is complementary to Paychex’s offerings and will add to the company’s capabilities in serving larger businesses, expand its suite of AI-driven HR technology, and create new opportunities for long-term growth. The acquisition marks the largest deal for the company and the transaction is expected to close in the first half of 2025.
Paychex (NASDAQ:PAYX) expects that the deal will generate run-rate cost synergies exceeding $80 million in the near term, with significant potential for revenue synergies over the following years. While the acquisition is expected to be neutral to slightly accretive to adjusted diluted earnings per share in the first fiscal year after closing, it is anticipated to become accretive in the second fiscal year and beyond.
3. Getty Images Holdings, Inc. (NYSE:GETY)
Number of Hedge Fund Holders: 4
While discussing Getty Images Holdings, Inc. (NYSE:GETY) and Shutterstock, Inc. merger, Cramer quipped that the company is buying Shutterstock.
“Next, early yesterday morning, we learned that Getty Images in Shutterstock, two of the leading purveyors of stock photos and videos, are joining forces in a merger of equals. Of course, in reality, there’s no such thing. Getty’s buying Shutterstock and their shareholders will own 55% of the combined company. This one’s pretty straightforward. You got two major players in the same industry combining to give themselves a lot more leverage versus their customers. Something they need in this age of AI-generated content.”
Cramer mentioned that when reviewing the transactions from early January, while some might have faced opposition from Biden’s more ideologically driven regulators, the majority of them appear reasonable and well-founded.
“Getty Images and Shutterstock. Now they’re fighting for their life in a world where generative AI systems can create images from simple text prompts. They’ll certainly be stronger together and they’ll be in a better position to negotiate with the software developers who want to license their photos to train their AI models. By the way, they’re also gonna benefit from widespread adoption of the latest NVIDIA platform, Blackwell, which works wonderfully with video.”
Getty Images (NYSE:GETY) provides creative and editorial visual content through platforms, offering a range of products from stock photos and videos to music licensing and digital asset management services. On January 7, the company announced a merger agreement with Shutterstock, aiming to combine its strengths in a transaction that will create a premier visual content company.
The merger, which is expected to have an enterprise value of approximately $3.7 billion, will retain the name Getty Images Holdings, Inc., and continue to trade under the ticker symbol “GETY” on the New York Stock Exchange. The combined company will offer an expanded content library. The merger is expected to strengthen the financial profile of the new entity, enabling further product investment and innovation in an increasingly competitive market.
Craig Peters, Getty Images (NYSE:GETY) current CEO, will lead the new company, which is projected to generate nearly $2 billion in annual revenues. The transaction is expected to result in up to $200 million in cost savings within three years after its completion. Getty investors will hold about 54.7% of the combined company, while Shutterstock stockholders will own the remainder.
2. Stryker Corporation (NYSE:SYK)
Number of Hedge Fund Holders: 55
Cramer expressed approval of Stryker Corporation’s (NYSE:SYK) decision to acquire Inari Medical, Inc. as he highlighted that the two companies’ portfolios will complement each other.
“And look, the Hulu deal was just the appetizer because from Monday night through Tuesday, we got several multi-billion dollar M&A transactions. Let’s take them in chronological order, starting with Stryker, that’s that medical device maker spending $4.9 billion in cash to buy Inari Medical, which is mainly focused on treating patients with venous thromboembolism or VTE. It’s a condition that impacts up to 900,000 people in the United States every year.
Stryker says that Inari product portfolio is highly complementary to their neurovascular business. I’ve checked it out. I agree. I like this deal… Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense… Stryker doesn’t currently do much in the very specialized venous thromboembolism space where Inari Medical operates, huge for them.”
Stryker (NYSE:SYK) is a medical technology company offering a range of products including implants for joint replacements, spinal systems, surgical equipment, patient safety technologies, and neurosurgical devices, among other medical devices. On January 6, the company announced a definitive agreement to acquire all outstanding shares of Inari Medical, Inc. in a transaction valued at approximately $4.9 billion. Founded in 2011, Inari Medical holds a strong position in the peripheral vascular market, particularly in the growing field of venous thromboembolism (VTE), which will complement Stryker’s existing portfolio.
The acquisition is expected to close by the end of the first quarter of 2025. In addition to the Inari acquisition, the company has made several other strategic moves. In the third quarter of 2024, it acquired Care.ai, advancing its healthcare IT and wirelessly connected solutions. It also purchased NICO Corporation, which facilitates minimally invasive procedures for tumor and intracerebral hemorrhage treatments. Furthermore, the acquisition of Vertos Medical allowed the company to expand its pain management portfolio with minimally invasive solutions for treating chronic lower back pain caused by spinal stenosis.
Based on its performance so far, Stryker (NYSE:SYK) forecasts a solid finish to 2024, with projected organic net sales growth between 9.5% and 10.0%. The company also expects adjusted net earnings per diluted share to fall between $12.00 and $12.10 for the full year.
1. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 76
Cramer discussed The Walt Disney Company’s (NYSE:DIS) merger of Fubo TV and Hulu + Live TV which was announced earlier in the year.
“On Monday morning, Disney announced it’ll be combining its Hulu+ Live TV business with Fubo, and that’s a small media company, but it offers a streaming service that’s focused primarily on live sports content. Disney effectively is acquiring Fubo. Through this deal, I gotta tell you, they’ll have a 70% stake in the combined entity, small, but could be important. They’re snapping this thing up just to stave off some litigation from Fubo, which is trying to block a streaming joint venture between Disney, Fox, and Warner Brothers Discovery.”
Cramer remarked that following Disney’s strong announcement after the market close, the company revealed it has around 157 million global users streaming content with ads. Cramer mentioned that they had discussed increasing their position in the Trust based on these numbers, which he found quite impressive. While he noted that he was unable to make any moves at that moment, he expressed his enthusiasm about what he was seeing.
“Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense. Disney tying up with Hulu and Live TV with Fubo, that clears the way for a streaming venture with Fox and Warner Brothers. I’m not sure that project will work, but now they can at least try it.”
Disney (NYSE:DIS), a powerhouse in the global entertainment industry, continues to expand its reach across various sectors, with a notable emphasis on its streaming operations. In early January, it made headlines with its announcement to acquire 70% of Fubo, a video service that had previously filed a lawsuit aimed at blocking Disney’s plan to launch Venu, a sports streaming venture in partnership with FOX and Warner Bros. Discovery.
The acquisition also resolves the ongoing litigation surrounding the Venu Sports platform. Instead of proceeding with the legal dispute, Fubo will merge with Disney’s Hulu + Live TV service. As reported by CNBC, Fubo shareholders will retain 30% of the company following the merger. The deal is expected to close within 12 to 18 months.
Fubo CEO David Gandler discussed the company’s acquisition of Hulu+ Live TV, calling it a stewardship of an iconic brand. Gandler acknowledged that having two separate platforms is not ideal but emphasized the potential backend synergies. While Fubo has focused on sports and news, Hulu+ Live TV brings strong entertainment content.
Disney’s (NYSE:DIS) Hulu+ Live TV and Fubo both offer services similar to a traditional cable TV bundle, featuring a range of linear TV networks. Together, the two platforms boast a combined subscriber base of 6.2 million. It’s important to note that the deal does not include Hulu’s original streaming platform.
While we acknowledge the potential of The Walt Disney Company (NYSE:DIS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DIS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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