Fantasy Merger League: 2018 Edition

SMITH BRAIN TRUST — When influential analyst and Loup Venture co-founder Gene Munster made predictions for 2018, there was one that really had people chatting. It was a prediction that online retail juggernaut Amazon.com might cut a deal to buy the struggling Target. It was a mergers-and-acquisition idea that seemed to align with some of the things that Amazon.com has been doing – establishing a brick-and-mortar presence and competing head-to-head with Walmart. And it had some people pondering other, equally intriguing, big M&A ideas.

This week, experts at the University of Maryland’s Robert H. Smith School of Business bring you its fantasy M&A league – a list of potential tie-ups and a little bit about what makes them interesting. If any of these deals happens this year, just remember you heard it first right here, from Smith Brain Trust.

CVS Health buys 23andMe: CVS, which recently announced a deal to acquire Aetna in a $69 billion deal, might pick up 23andMe this year, in a bid to collect even more customer data, predict future healthcare trends and lower costs. For CVS, which banned the sale of tobacco products in 2014 and banned photo manipulation in beauty promotions this year, an acquisition of 23andMe might further underscore a commitment to better health. — Elana Fine, Executive Director of the Dingman Center for Entrepreneurship 

Daimler buys Tesla: The deal will happen only if and when Tesla crashes from its current market valuation of $50 billion to, say, $5 billion. Tesla has a lot of liabilities, perhaps as much as $25 billion, so Daimler may wait to see whether Tesla goes into bankruptcy. But Daimler was an early Tesla partner, and is lagging behind in the electric vehicle space.  Brent Goldfarb and David Kirsch, associate professors of management and entrepreneurship

Hilton Worldwide Holdings buys Airbnb: The global hospitality firm will counter the surging competition from Marriott International by buying the world’s largest online home-sharing service. Competition from Marriott has intensified since the hotel chain bought rival Starwood Hotels two years ago. If you can't beat the trend of travelers choosing hotel alternatives, join them. Elana Fine, Executive Director of the Dingman Center for Entrepreneurship 

Kraft Heinz buys Campbell Soup: Kraft Heinz is 25 percent owned by Berkshire Hathaway and 25 percent owned by 3G Capital of Brazil. Heinz failed to acquire Unilever in 2017 and is likely to try to acquire another food company this year. It seeks to acquire undermanaged companies so it can reduce expenses while growing sales, thereby increasing profits. Once again, Berkshire Hathaway and its CEO Warren Buffett would be the financing partner of a deal to buy Campbell’s Soup, and 3G Capital would be the operating partner. Buffett has said he will only participate in friendly deals. The soupmaker’s market capitalization is $14 billion. — David Kass, clinical professor of finance

Or Kraft Heinz buys Colgate-Palmolive: Colgate-Palmolive would give Kraft Heinz the opportunity to diversify into household products and extend its geographical reach into Latin America and Asia. Colgate is well managed, but announced in 2017 that it’s willing to be acquired. If Kraft Heinz had been successful in acquiring Unilever in 2017, it would have acquired both a food company and a household products company. Colgate-Palmolive's market capitalization is $67 billion. — David Kass, clinical professor of finance

Uber Technologies buys Instacart: The grocery industry has been heating up with Amazon.com's acquisition of Whole Foods Market. Uber and Instacart — two behemoths in the gig economy — could combine forces to provide end-to-end grocery shopping and delivery. The merged company could compete with Amazon/Whole Foods by being agnostic of grocery chain. — Elana Fine, Executive Director of the Dingman Center for Entrepreneurship 

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About the Expert(s)

Dr. David Kass has published articles in corporate finance, industrial organization, and health economics. He currently teaches Advanced Financial Management and Business Finance, and is the Faculty Champion for the Sophomore Wall Street Fellows. Prior to joining the faculty of the Smith School in 2004, he held senior positions with the Federal Government (Federal Trade Commission, General Accounting Office, Department of Defense, and the Bureau of Economic Analysis). Kass has recently appeared on Bloomberg TV, CNBC, PBS Nightly Business Report, Maryland Public Television, Business News Network TV (Canada), American Public Media's Marketplace Radio, and WYPR Radio (Baltimore), and has been quoted on numerous occasions by Bloomberg News and The Wall Street Journal, where he has primarily discussed Warren Buffett and Berkshire Hathaway.

SchlakeOliver

Dr. Oliver Schlake is a Clinical Professor at Robert H. Smith School of Business, a senior business consultant, entrepreneur and researcher. His publications and research on scenario-based strategic planning and innovation strategy have been featured in leading academic and practitioner journals worldwide. Oliver has been an international management consultant and strategic advisor for leading companies and government agencies in Europe and North-America. Prior to joining the Smith School he was Assistant Professor for E-Business at National University, San Diego and CEO for German based consulting firm Scenario Management International (ScMI AG).

KirschDavid

David A. Kirsch is Associate Professor of Management and Entrepreneurship in the M&O Department at the University of Maryland's Robert H. Smith School of Business. From 1996 to 2001, Kirsch held various adjunct and visiting appointments at the Anderson Graduate School of Management, University of California, Los Angeles. He received his PhD in history from Stanford University in 1996. His research interests include industry emergence, technological choice, technological failure and the role of entrepreneurship in the emergence of new industries.

GoldfarbBrent

Dr. Brent Goldfarb is Associate Professor of Management and Entrepreneurship in the M&O Department at the University of Maryland's Robert H. Smith School of Business. Goldfarb's research focuses on how the production and exchange of technology differs from more traditional economic goods, with a focus on the implications on the role of startups in the economy. He focuses on such questions as how do markets and employer policies affect incentives to discover new commercially valuable technologies and when is it best to commercialize them through new technology-based firms? Why do radical technologies appear to be the domain of startups? And how big was the dot.com boom? Copies of Dr. Goldfarb's publications and working papers have been downloaded over 1200 times.