3 Stocks in the M&A Spotlight

3M Co (NYSE:MMM), Monsanto Company (NYSE:MON), and Momo Inc (ADR) (NASDAQ:MOMO) are making M&A headlines today

by Karee Venema

Published on Jun 23, 2015 at 12:11 PM
Updated on Jun 24, 2020 at 10:16 AM

It's been a week chock-full of M&A activity, and it's only Tuesday. Kicking things off on Monday was CIGNA Corporation (NYSE:CI), which shunned a $54 billion takeover bid from one if its sector peers. Today, Verizon Communications Inc.'s (NYSE:VZ) big acquisition is garnering some headlines, as well as news from 3M Co (NYSE:MMM), Monsanto Company (NYSE:MON), and Momo Inc (ADR) (NASDAQ:MOMO).

  • MMM said today it will purchase safety equipment specialist Capital Safety from KKR & Co. L.P. (NYSE:KKR) in a deal worth $2.5 billion, making it the largest acquisition in 3M Co's history. The stock has edged up 0.1% to $159.87 in the wake of the announcement, but still remains nearly 3% lower on a year-to-date basis. Option traders have taken a glass-half-empty approach to the blue chip in recent weeks, and have been buying to open puts over calls at an accelerated clip. Specifically, the security's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.65 ranks in the 72nd percentile of its annual range.

  • MON has been unsuccessfully trying to woo Syngenta AG (ADR) (NYSE:SYT) in recent months, and today Michel Demare -- chairman of SYT -- laid out a list of parameters Monsanto Company would need to follow for the firm to seriously consider an offer. For instance, SYT said MON's $2 billion breakup fee was "wholly inadequate" for a transaction that involves "a lot of uncertainty and no guarantee of completion." At last check, the fertilizer firm was off 0.8% at $113.45, extending its 2015 deficit to 5%. In the options pits, MON's 50-day ISE/CBOE/PHLX call/put volume ratio of 1.32 sits higher than 71% of similar readings in the past year -- pointing to a preference for long calls over puts of late. With the company slated to unveil fiscal third-quarter earnings tomorrow morning, short-term options have been pricing in elevated volatility expectations, relatively speaking. The equity's Schaeffer's Volatility Index (SVI) of 23% rests in the 68th annual percentile.

  • Heading into today's session, MOMO was up almost 31% year-to-date, and today, the shares have added an additional 10% to trade at $17.31. Similar to last week's action for fellow China-based name Qihoo 360 Technology Co Ltd (NYSE:QIHU), the app developer is getting a boost on reports of a $3.6 billion takeover bid from CEO Yan Tang and a number of investments firms. Should Momo Inc continue its journey north, short sellers could be prompted to throw in the towel on their losing bets. Short interest rose 3.6% over the last two reporting periods, and now accounts for a lofty 14.3% of the equity's available float.

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