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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