Monday Merger Madness

By Nicholas Jasinski |  Monday, September 14

Let's Make a Deal. Technology stocks were among the leaders of a broad rally today, coming off of two straight weeks of declines. All 11 sectors in the S&P 500 rose, as the index gained 1.3%. The Dow Jones Industrial Average added 1.2% and the Nasdaq Composite surged 1.9%.

There was some positive Covid-19 vaccine news, but an eruption of mergers and acquisitions activity also lifted investors' spirits. Bankers and lawyers worked overtime this past weekend to iron out the details on a bevy of deals.

The highest-value transaction was Nvidia's agreement to buy U.K.-based chip-designer Arm Holdings from Japan's SoftBank Group for $40 billion. That makes it the biggest semiconductor industry deal ever. The price is $8 billion more than what Masayoshi Son's conglomerate paid for Arm back in 2016. Nvidia is strongest in graphics chips, while Arm's designs are used by Nvidia and its competitors in smartphones and other devices. 

Nvidia stock closed up 5.8% today, while Softbank's added 9%. Eric Savitz has more on the deal.

Verizon Communications announced a deal to buy TracFone Wireless from América Móvil for about $6.3 billion. It is a move to expand Verizon’s presence in the prepaid and value segments of the U.S. wireless business as the industry transitions to next-generation 5G networks. TracFone has several brands—including StraightTalk Wireless, and SIMPLE Mobile—but doesn’t own a network, instead operating under wholesale agreements with the big three wireless companies. Verizon lags behind competitors AT&T and T-Mobile US in prepaid subscribers, and 13 million of TracFone's 21 million customers already connect to the Verizon network. 

Verizon stock rose 0.9% today and América Móvil added 7.7%. I wrote more about Verizon's TracFone acquisition at barrons.com.

In another mega-deal, Gilead Sciences will pay $21 billion to acquire Immunomedics, known for a new cancer treatment called Trodelvy. The deal price is more than double where Immunomedics stock closed on Friday. Trodelvy has only been on the market for a short time, but Gilead clearly sees a lot of growth potential for the treatment and possible uses against more forms of cancer. Gilead's main franchises are in antiviral drugs against hepatitis and HIV. It also produces remdesivir, a drug that has shown potential against Covid-19.

Gilead stock added 2.2% today, while Immunomedics soared 98%. Bill Alpert covered the deal.

Elsewhere in M&A-related news, several outlets reported on Sunday that Oracle was the sole remaining bidder for TikTok's U.S. operations. But the transaction might not be an outright sale, with China's ByteDance retaining ownership and Oracle acting as more of a technology partner. An executive order gives ByteDance until next weekend to divest U.S. TikTok or else face a ban in the country. The White House will review Oracle's deal this week. Microsoft had been widely seen as the most likely acquirer for TikTok’s U.S. unit.