Welcome to the Oracular issue of M&A Daily
Warren Buffett's Berkshire Hathaway (BRK.A/BRK.B) increased its equity exposure from $129 billion to $148 billion, adding to positions in Apple (NASDAQ:AAPL) and airlines such as American (NASDAQ:AAL), Delta (NYSE:DAL) and United (NYSE:UAL) while starting an investment in Southwest (NYSE:LUV).
Berkshire also jumped into deal target Monsanto (NYSE:MON). As discussed in Before Berkshire, Buffett has a long and successful history as an arbitrageur. The $20.74 arb spread offers a 23% IRR if the deal closes by year-end.
Johnson & Johnson
As discussed in GM Breaking Up?, General Motors (NYSE:GM) is in talks to unload Opel on PSA, parent company of Peugeot and Citroën. It is not yet clear where talks will lead, but they could lead to a full merger. FFP could be a beneficiary. Today, it trades at a 20% discount to its NAV. GM is working with Citi (NYSE:C); Peugeot is working with Morgan Stanley (NYSE:MS).
SoftBank (OTCPK:SFTBY) is buying Fortress (NYSE:FIG) in a $3.1 billion cash deal. FIG holders get $8.08 per share. Each FIG share may get up to two $0.09 quarterly dividends. The buyer is working with JPMorgan (NYSE:JPM); the target is working with Morgan Stanley.
Elsewhere on Seeking Alpha
Beyond Seeking Alpha
- Warren Buffett's Best Investment
- Sequoia Fund's Q4 2016 letter
- Huge premium for false scarcity
- Happy birthday, Sir Ernest Shackleton
- TICC's (TICC) return is 45% since Another BDC With A Catalyst
- We valued Zions (NASDAQ:ZION) at $45-50; it is now priced there.
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Disclosure: I am/we are long BRK.A, BRK.B, MON, TWX, SYT.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Chris DeMuth Jr and Andrew Walker are portfolio managers at Rangeley Capital. We invest with a margin of safety by buying securities at discounts to their intrinsic value and unlocking that value through corporate events. To maximize returns for our investors, we reserve the right to make investment decisions regarding any security without notification except where notification is required by law. This post may contain affiliate links, consistent with the disclosure in such links. We manage diversified portfolios with a multi-year time horizon. Positions disclosed in articles may vary in sizing, hedges, and place within the capital structure. Disclosed ideas are related to a specific price, value, and time. If any of these attributes change, then the position might change (and probably will).
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.