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Tickers in this Article: KFT, CBY, HSY, CF, AGU, TRA
The past year certainly had its fair share of mega-deals and mega-bailouts. Some deals were completed rather quickly, while others remain up in the air, likely to be decided in 2010. There are two notable deals that need to be watched in 2010, as they will likely create (or destroy) value for shareholders.

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The Sweet Deal
Earlier in 2009, Kraft Foods (NYSE:KFT), the worlds second largest food company, announced its plans to buy candy company Cadbury (NYSE:CBY). The initial stock and cash price offered was a premium to Cadbury's then share price. However, immediately after the deal was announced, Cadbury shares jumped way ahead of Kraft's implied offer. As 2009 comes to an end, Cadbury refuses to accept the deal on current terms. In fact, in November, Kraft made another formal offer that was slightly below its original. Clearly, Cadbury's board rejected the offer as inadequate, so Kraft is taking the offer directly to shareholders. At the time, there were no other suitors for Cadbury.

However, chocolate company Hershey (NYSE:HSY) has now expressed interest in Cadbury. Unlike Kraft, Hershey would likely have to bring in a partner to do the deal, as its balance sheet is far too small to take on the acquisition alone. While there hasn't been a formal offer made, its presence does add a little drama to the deal. For what's it worth, a Kraft/Cadbury combination has a lot of advantages. Kraft would get immediate penetration into the instant purchase market, as well a greater presence in emerging markets. With or without Cadbury, Kraft shares look like a good value here, and would be even better with Cadbury.

Growing Pains
The other notable deal of intrigue is occurring inside the agricultural industry amongst fertilizer companies. It began when CF Industries figured it could expand cheaply by announcing a deal to acquire smaller nitrogen player Terra Industries (NYSE:TRA). It wasn't long before CF became a target. Shortly thereafter, Canadian fertilizer giant Agrium (NYSE:AGU) announced a cash and stock deal to acquire CF. However, Agrium's deal was contingent on CF not acquiring Terra. Thus began the saga of the fertilizer wars in 2009 that was still going strong in December. Since Agrium first made its offer for CF earlier this year, the company has increased its offer three times, so that it now represents a near 100% premium to the CF's share price at the time the deal was announced. Agrium's latest offer for CF is valued at about $104 a share in cash and stock. Under the offer, CF shareholders would receive $45 in cash, as well as one common share of Agrium for each CF share. (Learn more about takeover resistances in Corporate Takeover Defense: A Shareholder's Perspective.)

Considering that shares in CF were trading for less than $90 heading into December, the market is not sure which will prevail. CF clearly sees itself as undervalued, but getting a share in Agrium offers CF shareholders a chance to participate in the long-term upside of the deal. This could be a very lucrative deal in the making, depending on who buys whom.

The Bottom Line
Pay attention to the purchases, the prices and terms of the deals, as those factors may provide some great insight into valuing competitors, or signal any other deals that may take place.

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