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Jim Cramer talks the latest in consumer M&A and spinoffs

CNBC Television • 2025-07-14 • 11:28 minutes • YouTube

🤖 AI-Generated Summary:

🎥 Jim Cramer talks the latest in consumer M&A and spinoffs

⏱️ Duration: 11:28
🔗 Watch on YouTube

Overview

This episode of "Mad Money" with Jim Cramer focuses on the emerging wave of
mergers and acquisitions (M&A) in the stock market, which he believes is being
overlooked by both the media and investors. Cramer analyzes recent and upcoming
deals, discusses their broader implications for the market, and offers
actionable advice for individual investors during this period of increased
corporate activity.

Main Topics Covered

  • Resurgence and significance of M&A activity in the market
  • Specific M&A examples: Kraft Heinz, Kellogg, Kenvue, Becton Dickinson/Waters, Huntington Bancshares/Veritex
  • Impact of M&A on investment banks and the broader stock market
  • Shifts in regulatory and antitrust attitudes towards deals
  • Market sentiment: institutional vs. individual investors
  • Company-specific discussions: UnitedHealth, CrowdStrike, Zimmer Biomet
  • Advice for individual investors during M&A waves

Key Takeaways & Insights

  • M&A Activity Is Rising: Despite a lack of attention, significant deals are happening, signaling the beginning of an M&A boom that could benefit the whole market.
  • Deals Are Misunderstood or Undervalued: Many recent deals, such as Kraft Heinz’s potential breakup or the Becton Dickinson/Waters merger, are being dismissed or misunderstood, leading to missed opportunities.
  • Old Brands Still Have Value: Brands seen as outdated or stagnant (e.g., Maxwell House, Visine, Froot Loops) still attract buyers, as demonstrated by recent acquisitions.
  • Regulatory Environment Is Shifting: There’s a notable change in antitrust and regulatory attitudes, making M&A activity more feasible than in recent years.
  • Timing Matters: The current “ripple stage” of M&A waves is often the best time for investors to buy, before deals become more widely recognized and priced in.
  • Market Sentiment Diverges: Institutional investors are cautious or selling, while individual investors are actively buying, disregarding negative news like tariffs.

Actionable Strategies

  • Look for Value in Unloved Brands: Consider investing in companies with legacy brands that may be targets for acquisitions or breakups.
  • Don’t Panic-Sell on Negative News: Short-term negative headlines (like tariffs) don’t necessarily correlate with long-term market direction—use dips as buying opportunities.
  • Be Wary of Downgrades During M&A Waves: Downgrades of deal-focused banks like Goldman Sachs may be premature; consider holding through short-term weakness.
  • Monitor Regulatory Shifts: Stay aware of the regulatory landscape, as a friendlier environment can make more deals possible and lift related stocks.
  • Assess CEO Leadership During Turnarounds: In tricky situations (e.g., UnitedHealth), strong leadership can be a reason to hold rather than sell.

Specific Details & Examples

  • Kraft Heinz Breakup: The company plans to keep fast-growing brands like Heinz Ketchup and Philadelphia Cream Cheese, while separating slower brands like Oscar Mayer and Velveeta.
  • Ferrero’s Acquisition of Kellogg’s Cereal Business: Ferrero paid $3.1 billion for brands such as Froot Loops and Corn Flakes, showing that even slow-growth brands have significant value.
  • Kenview’s CEO Change and Strategic Review: After disappointing growth, Kenview replaced its CEO and announced a strategic review, signaling future deal activity.
  • Becton Dickinson/Waters Deal: A complex reverse Morris trust transaction resulted in Becton Dickinson gaining a 39.2% stake in the combined entity, with $4 billion in cash and $4 billion in assumed debt.
  • Huntington Bancshares/Veritex Merger: Huntington’s $1.9 billion acquisition of Dallas-based Veritex aims to expand its presence into Texas, a high-growth state.
  • CrowdStrike and Zimmer Biomet: Discussed as examples of companies using acquisitions for strategic growth and recovery.

Warnings & Common Mistakes

  • Underestimating M&A Impact: Ignoring or dismissing early-stage deals can lead to missed investment opportunities.
  • Overreacting to Short-Term News: Selling on negative headlines (like tariff announcements) can be costly, as markets may rebound quickly.
  • Misunderstanding Complex Deals: Deals structured for tax efficiency (e.g., reverse Morris trust) may be confusing and initially misunderstood, leading to poor short-term market reactions.
  • Prematurely Selling Strong Institutions: Downgrading or selling major deal-makers (like Goldman Sachs) before M&A benefits are realized can be a mistake.

Resources & Next Steps

  • Engage with Mad Money: Viewers are invited to call, tweet, or email questions, and follow Jim Cramer on X (Twitter).
  • Monitor Earnings Reports: Especially for banks like Goldman Sachs, as M&A revenue will appear in future quarters.
  • Watch for Further Coverage: Upcoming interviews with CEOs (e.g., Huntington Bancshares, CrowdStrike) for deeper insights on recent deals.
  • Stay Informed: Pay attention to regulatory trends and M&A news to identify early-stage opportunities.

📝 Transcript (428 entries):

you for watching fast money. >> Mad money starts now. >> Hey I'm Cramer, welcome to Mad Money. Welcome to Cramerica. Other people want to make friends I'm just trying to make you a little money. My job is not just to entertain but to educate you. So call me at one 800 703 CNBC or tweet me JimCramer. They don't start big but we're beginning to see deals important ones. And they aren't getting enough attention from the market or from the media for that matter. If anything on the eve of the unofficial start to earnings season they're being dismissed. And that's just plain stupid. I even saw a downgrade today of Goldman Sachs, the principal deal house, and I almost have to laugh about how wrongheaded that is. Sell, sell, sell. Oh, and let's not forget these mergers aren't just good news for the investment banks. They're good news for the entire stock market, which may be sensing something because we started the day down big and then rebounded with the Dow closing up 88 points. This would be advancing 0.1 4% and the Nasdaq gaining 0.2 7%. You know what. It's actually a stupendous comeback, especially in light of some of the incredibly aggressive, some would say negative tariff news from the president this weekend. Everywhere I went, people said, oh boy, I guess the market's going to be down big on Monday. I said, no, not so fast. Regular viewers know that. I think we have two markets here, big institutional investors. They've generally been selling, but individual investors have been buying stocks hand over fist. I don't think they seem to care about the tariffs. They know that everybody sold after the Liberation Day announcements. And anyone who did, they turn out to be a big mistake. They missed a big move. But don't be so shortsighted. We're seeing the beginnings of an M&A boom here, even as it may not feel like it, because often the deals seem, well, dowdy or let's say, not clear yet or in the future. I mean, look, you have Kraft Times. It's reportedly breaking up soon. People are yawning. So what. So what they're saying big deal, I say, no, that is dead wrong. Company said to be planning to keep its faster growing brands like Heinz Ketchup. A lot of new derivatives there. Kraft Mac and cheese. Pacific I'm sorry. Philadelphia cream cheese while separating the brands with the slowest growth like Oscar Mayer packaged foods. Velveeta cheese deal. Putting Heinz and Kraft together sounded like a match made in heaven in 2015. How could it fail. Great name brands orchestrated by Warren Buffett and the brilliant people from 3G capital, the Uber successful Brazilian private equity firm. It felt like the center of the store blockbuster. But then people stopped going to the center aisles of the supermarket, and that spelled trouble for Oscar Mayer, for Jell-O, for Miracle Whip, for Maxwell House, for Velveeta, which apparently can survive thermonuclear war and Cheez Whiz of whiz wit fame. If you go to Gino's in Philly, which remains my go to place when I head to the City of Brotherly Love. Here's what's amazing, though. People now think these brands have no value. But you know what. That's what they said about W.K. Kellogg. The cereal business when it split with kilonova, the fast growing part of the Kellogg family, which, of course, got a bid until the cereal acquirer couldn't couldn't resist cereal and the. S e r I a l c require. Ferraro stepped up and paid 3.1 billion for the maker of Froot Loops and Corn Flakes. That was some deal last week. It was amazing. Sure, it's supposed to be a nightmare in a world where Human Health and Human Services Secretary RFK Jr is on a crusade against food coloring. But it was a dream come true for Ferraro, which has spent $13 billion in ten years to expand around the globe. They don't want to be just a small Italian company. My feeling is that if Giovanni Ferraro sees value in Froot Loops, he might see some value in some of the Kraft Heinz brands, too. Or consider can view. Two years ago, this company was spun off by Johnson, and Johnson wanted to unload its fantastic consumer business. Think Tylenol, Neutrogena, Listerine, Aveeno, Sudafed, Pepcid, Band-Aids, Zyrtec and so many others all under one roof. The company picked this fellow, Tebow Mangan. He's the leader of. He was the leader of J&J Consumer Health division to run it. We learned today that he was sacked after activist pressure. And Kirk Perry, a current director, was named interim CEO. Kennedy also announced a strategic review of its brand stable. That's what we're hoping will happen at Kraft Heinz. Is this shocking. Was it amazing that Ken View already got rid of the CEO in two years. Well, yes. If you saw the numbers can view reported -4% organic growth when Wall Street was expecting plus 2 to 4%. But I bring this up because more deals are coming in that space. Any one of the majors would be thrilled to snap up some of these brands, because there's very little organic growth in the industry. The only way you can have any growth is buy it. All right. Now, how about this merger today between Becton, Dickinson and this was the life science and diagnostic division, which had been shopped extensively. And waters a really strong company. We've had them on a dominant player in exactly those fields. The deal was done in a very confusing reverse Morris trust way, which is one of those tax savings situations that the Street almost always hates, but the CEOs think is so smart and they hate it because they aren't easy. They're not clean. The merger was greeted with horrors for waters, which saw its stock plunged 13.5%. That's part of the greeting. It shouldn't have been down that much, but people didn't understand it back then. Dickinson's getting a 39.2% stake in the newly combined waters. After selling off this morning, its stock actually finished in the black. Seemed like a great deal to me, especially because the company got $4 billion in cash and assumed 4 billion in debt. Really good deal for Becton Dickinson. But again, it's hard to get your head around. So it didn't bring out many buyers, at least not today. Believe me, that will change. And people will say that not everyone lost. Oh, by the way, big winners included Barclays, which represented Waters in city, worked with Becton Dickinson. This $17 billion transaction they made out like Davids. Or how about one in tonight's guest Huntington Bancshares which announced it was buying Veritex. I thought it was a tech company. No, it's Dallas based, Dallas based bank for 1.9 billion. I know, not huge, but it puts Huntington in the queue to shed its regional status because much more of a national bank, at least in the parts of the nation that are good for business. CEO Steve Steinhauer says that vertex will help his Ohio based bank moving to a number of cities in Texas, which is one of the great growth states in the union. I think this is the kind of deal we'll start to see more and more of now that we have a new banking regulatory regimen and antitrust authorities that won't reflexively block acquisitions. We'll talk to Steve Steiner later in the show about how this acquisition fits into Huntington's aggressive long term plans. In the end, what matters is the deals are getting done, even if they're sometimes being done at prices that don't. People don't like like the waters deal. I'm extremely confident that someone will want some of Shenmue, if not all of Kenmu, because those brands are slowly. But if you put a bunch of them together, you might have something that Wall Street gets very excited about. And again, it's not just about the takeover targets. These M&A deals are incredibly lucrative for the banks that orchestrate them. The results won't necessarily be seen this quarter. So I can see why citizens JMP, a brokerage house, might take Goldman Sachs from buy to hold. Goldman reports Wednesday, and you won't see the bump in numbers from the deal market yet. However, these heart, these Heart of July deals are terrific harbinger for the fall. You don't usually get a lot of deals during the summer, and I don't think it makes sense to sell Goldman here and then try to get back in it later. Good luck. Even if they miss the quarter on Wednesday, it's not going to stay down for long. I'm clearly not alone as the stock actually rallied more than $8 today despite this downgrade. Here's the bottom line you don't get a wave of deals out of nowhere. You get a ripple. And then ever bigger waves. Right now we're in the ripple stage. That's when it's best to do some buying. By the way, even if you think brands like Maxwell House and Visine and Corn Pops died years ago, don't worry about it. They may not be exciting to you, but they are plenty of potential buyers who are excited about that. We happy to snap them up. And the regulators are no longer blocking every M&A deal under the sun. As we head into the bank earnings tomorrow, don't think about the past with Washington leaning against every deal. Think about the future where it looks like the government is encouraging deals and is no mood to get in the way of capitalism, at least the way we used to know it. Let's go to Rick in Oklahoma. Rick. >> Booyah Jim. >> Booyah Rick. >> What's up. Club member for about two years oh a long hello first time caller. And thanks for all you do. >> Oh thank you. It's been a tough it's you know yeah just working working around the clock right now it seems. But I'm glad you liked it. Thank you so much. How can I help you. >> Have a very, very fast shout out to the OKC Thunder for winning the NBA championship. Absolutely. >> You did a good job okay. >> And I have a few hundred a few hundred shares of stock with the company. >> I think when you know we were we were at Win earlier this year and I was very worried about China. I still am, but my they've got a good thing going. Craig Billings is such a good manager. He's actually terrific. And I'm glad to see that stock is finally starting to move. It's still very inexpensive on a PE basis. How about we go to Jay in Washington. >> Jay hey Jimbo how's it going. >> Not bad J how about you. >> I'm doing excellent. Thank you. Hey I'm a long time listener and charter club member. Thanks for helping me retire early. >> There you go. That's as I told Casey Sullivan, our boss. We are changing people's lives. It's different from compensation that that you're used to. With dollars. It's a different kind of compensation. I like it more. How can I help you. >> I used to work hard for my money. Now my money's working hard for me. In January, I started building a large position in this best of breed company. Now I'm in the House of Payne. I agree that it doesn't matter where stocks been, it's about where it's going. And I don't think this company is going to meet earnings expectations later this month, and we'll keep falling anyway. I want to sell half my position now and the rest into any strength before earnings. Maybe invest the proceeds in one of my growth stocks okay. This stock's flatlined and looks like dead money. What are your thoughts on UnitedHealth. >> You know what UnitedHealth is very very tricky. It might be a long term turn. But I will tell you this Steve Hemsley is the only person I know who could possibly turn this thing around. Hemsley is back as CEO. He was amazing. I think you have to have fortitude to be in it. I don't like the situation because there's so many winners, as you say, but at least I want people to know that. I think Hemsley is the real deal. All right, look, you don't get a wave of deals out of nowhere, and now we're starting to see something happen. I think it's a sign that you got to do some buying. Look at the dip today. It was such a great opportunity again. Mad money tonight. It's been one year since CrowdStrike to outage took down millions of PCs worldwide. I'm sitting down with the company's CEO to dig into their incredible recovery efforts. Ben Zimmer Biomet announced an acquisition this morning that will strengthen its robotic surgery portfolio. Mentions a couple acquisitions. Not this one too small, but I'm hearing about robots in the future and what they're going to do because that company is not growing fast enough. And I think this might accelerate it. And it's steel season. As I've said, Huntington Bancshares are snapping up Texas based vertex. What does it mean for the Lone Star State. What does it mean for the Buckeye State. What does it mean for your money. I'm going one on one with Huntington's top brass to break it all down. So stay with Cramer. >> Don't miss a second of Mad Money Follow JimCramer on X. Have a question. Tweet Cramer hashtag mad mentions. Send Jim an email to madmoney.cnbc.com. Or give us a call at one 800 743 CNBC. Miss something. Hea.