Cramer's Mad Money - 3 Mergers That Should Happen (6/14/11)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Tuesday June 14.

Timberland (NYSE:TBL), VFCorp (NYSE:VFC), Nike (NYSE:NKE), Lululemon (NASDAQ:LULU), Deckers (NASDAQ:DECK), Under Armour (NYSE:UA), Columbia Sportswear (NASDAQ:COLM)

On news that VFCorp (VFC) is buying Timberland (TBL) at a premium of $43 per share, Cramer discussed 3 takeovers he would like to see. VFCorp is benefiting from TBL's low price after its disappointing quarter and investors seemed to like the news about the merger, since VFCorp's stock rose 10% on Tuesday. Timberland should add 25 cents a share to VFC's earnings and will help expand its outdoor segment.

Cramer discussed 3 mergers that should happen:

1. Lululemon (LULU) should buy Under Armour (UA) to expand its selection of men's sportswear and simply because it can, with UA valued at a low $3.6 billion compared to LULU's market cap of $6.5 billion.

2. Nike (NKE) should buy Lululemon if the latter does not buy Under Armour. Nike needs LULU's exposure to women's sportswear and LULU can benefit from Nike's distribution.

3. VFC should buy Deckers (DECK) or Columbia Sportswear (COLM). Even after the Timberland deal, VFC has enough cash to buy either of these two companies.

CEO Interview: Aubrey McClendon, Chesapeake Energy (NYSE:CHK)

Oil discoveries in the U.S. are transformative for the economy, and Chesapeake (CHK) is at the forefront, as the biggest driller in the U.S. The company is also the second largest holder of natural gas assets and has boosted its dividend 17% and its hiring. The stock is up 24% since Cramer recommended it in October.

CEO Aubrey McClendon said that the discovery of oil in the U.S. has been "the most important story of our time." The improvement of technology, including horizontal drilling and hydraulic fracing has revolutionized the industry. The company is hiring 2,000 more people in 2011 and plans to hire 2,000 more next year. Thanks to the increase in production, CHK can sustain its dividend and raise it in the future. Cramer is bullish on CHK.

Target (NYSE:TGT), Apple (NASDAQ:AAPL), J.C. Penney (NYSE:JCP)

The announcement that Ron Johnson will leave Apple (AAPL) and take the helm at J.C. Penney (JCP) is the sign that JCP is on its way toward a comeback, since Johnson is the primary architect of Apple's retail success. Apple Stores generate $4,000 in sales per square foot. However, the decline in Target (TGT) since Johnson left that retailer has Cramer "curbing his enthusiasm" about the future of Apple post-Johnson. However, he thinks Apple could still go to $400.


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