Thursday, December 4, 2008
(Cont'd from above)...

Jim (cont'd):    So, Mad Money, once again, is going matrimonial!... It's time for companies that are sitting on big piles of cash to start getting married to other businesses... some would say, "acquiring"... and they can do it at bargain-basement prices, because so many stocks have been pummeled, courtesy of hedge funds gone wild and mutual fund redemptions.

JNJ has paved the way with its beautiful, spectacular plural marriage to Omrix (OMRI) and Mentor (MNT)...

Yesterday, I suggested a shotgun wedding... for Pfizer (PFE) and Allergan (AGN)... and, today, I've got two more shotgun corporate weddings that could make all involved money... and I've got two others tomorrow...

The first marriage I want to propose today... is Illinois Tool Works Inc. (ITW) to buy a Lightning Round favorite, Manitowoc Co. Inc. (MTW).

The two companies have quarreled in the past, and got into a bidding war over British food and beverage equipment maker, Enodis ... a bidding war that MTW won... although now I bet they wish they hadn't.

Get this progression... ITW was willing to offer $2.3 billion for just Enodis... but now MTW's stock has been ravaged by hedge funds gone wild... This was a $50 stock last year. Now it's a $6 stock... an 87% decline.

Right now, MTW has a market cap... just right this down... of a little more than $900 million... less than half of what ITW was willing to pay just for its target... just for Enodis... That's unbelievable!

Now, ITW can marry MTW, getting Enodis as part of the bargain... for a pittance. Talk about buy one, get one... That's what ITW can do now... getting Enodis for free.

It's hilarious how this all played out... it's hilarious...

On April 14th, MTW offered to buy... offered to pay $2.1 billion for Enodis... then ITW saw them and raised them with a $2.3 billion offer on May 8th. MTW saw them and raised them again, with a $2.4 billion offer on May 19th. And then, MTW called them, and won the auction. $2.7 billion... Remember, the stock's worth $900 million now.

I'm sure the guys at ITW are laughing and thanking their lucky stars... and glad they didn't pay up, because now they've got the opportunity of a lifetime... ITW has about $900 million in cash on hand, and not all of its businesses overlap with MTW's... For example, I don't know what they do with that crane business, but maybe they can team up with another company, buy MTW and split it up... all for billions less than they would have had to pay just six months ago...

This is the ultimate revenge wedding...

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Now it's time for yenta Cramer to make me a match, find me a find, catch me a catch...

Here it is...

Yup, Nike Inc. (NKE*) and Under Armour, Inc. (UA)...

This match is so obvious, I don't know why NKE hasn't done it already. UA is the hot sports apparel and footwear name. It's been justly described as the next Nike... And, best of all, its stock has taken a complete and utter beatdown!...

Back in September of 2007, UA was a $3.3 billion company, with a $67 stock. Now it's a $1.8 company, with a $24 stock...

NKE spends $5 billion a year alone on buying back stock!... And it's got $2.6 billion in cash. I would think it would be better spent picking up UA at an unbelievably-low price, and wiping out the only real potential long-range competition, courtesy of hedge funds, of course, gone wild.

NKE hasn't made an acquisition since it bought Umbro back in October of 2007 for $582 million. Now, if NKE offered the same bride price... I mean, valuation... for UA, that it gave to Umbro, it will paying between $31 to $33 a share... about a 32% premium to the current price. Hey, I regard that as generous... generous to UA, given where the stock is now, even though, as a brand and a company, UA should be able to fetch a major premium to Umbro. Thanks to all the selling, UA can get hitched on the cheap.

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Why would UA agree to sell?...

First off, NKE gives them that major international distribution that everybody wants... something the company doesn't have now... 91.7% of UA sales are coming from the U.S....

Second...

Even if they sold at $30, you have to remember that UA came public at $13 a share. Hey, that's a pretty good deal... 64% from that. The original shareholders would still be up 130% from the IPO.

If NKE manages to steal UA at these prices, they'd be getting a year's worth of growth for less than what they spend annually buying back their stock, which does nothing...

I think the two of them would be a powerhouse...

Here's the bottom line...

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The Bottom Line!:     This market needs more weddings and fewer funerals... Companies need to stop sitting on the sidelines and start proposing to each other. Illinois Tool Works Inc. (ITW)... Get your revenge, and I think your stock would be a mega buy. Nike (NKE*), come on!... It's staring you right in the face! Marry Under Armour, Inc. (UA)!... And don't forget my consultation fee.

[verbatim recap]

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