Last week, Twitter Inc (NYSE:TWTR) was on the tip of everyone’s tongue as investors speculated about whether salesforce.com, inc. (NYSE:CRM) would acquire the social media company. In the end, Salesforce CEO Marc Benioff turned away from the deal, leaving the little blue bird high and dry.
This wasn’t Twitter’s first time being involved in M&A rumors — the firm is rumored to have had everyone from Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) to Walt Disney Co. (NYSE:DIS) expressing an interest over the past year.
While Twitter’s declining share price has made the company a good takeover target, uncertainty surrounding the company’s business model and growth prospects have kept potential suitors from following through.
Many analysts say that if TWTR continues on a downward trajectory over the next year it will be forced to auction itself off, but in the meantime, there are plenty of other M&A rumors to keep investors busy.
Stocks That Should Be Bought Out: Netflix (NFLX)
Potential Buyers: Apple, Disney
Movie and TV streaming service Netflix, Inc. (NASDAQ:NFLX) has made waves over the past two years as more and more people turn away from traditional cable and toward online streaming. The fast-changing media landscape has made the industry ripe for M&A activity, and NFLX has found itself at the center of consolidation rumors within the space.
NFLX is definitely an expensive takeover target considering that the stock was one of the top gainers in 2015 and has a price-earnings ratio of about 330. Netflix is at the top of the pack, however, when it comes to online streaming services. Media companies hoping to remain relevant in the years to come need to be onboard with this trend.
If anyone is going to buy Netflix, it’s going to be a company with the financial power to do so. That’s why Apple Inc. (NASDAQ:AAPL) is often rumored to be interested in purchasing the firm. Apple’s huge cash coffer makes it one of the only companies that could potentially purchase NFLX using cash, and AAPL has yet to come out with an offering that competes in the visual streaming space.
Disney is another potential NFLX suitor — rumors surfaced this month that the media firm was interested in acquiring Netflix in an effort to beef up its presence in the streaming space. The huge audience and streaming infrastructure that NFLX brings to the table is certainly attractive to DIS, but it will be a question of whether the company can afford such a purchase.
Stocks That Should Be Bought Out: GoPro (GPRO)
Potential Buyers: Under Armour, Apple, Sony, Microsoft
Action camera maker GoPro Inc (NASDAQ:GPRO) made its name with high-definition, mountable cameras that were used by everyone from extreme sport athletes to amateurs on vacation. The buzz surrounding the firm quickly died down, however, as lower-priced rivals and a lack of customers willing to upgrade weighed on sales. Now, most agree that GPRO is stuck in a rut that will be difficult to come back from.
While GoPro has recently released a drone model and is focusing on developing a services arm that allows users to edit and share their footage, the company’s share price has been on a steady decline for well over a year. That puts the firm squarely in takeover territory and there have been several rumors about firms that might be interested.
Apple has been mentioned as a possible suitor for GPRO, largely due to the tech firm’s enormous buying power. Other tech companies like Sony Corp (ADR) (NYSE:SNE) or Microsoft Corporation (NASDAQ:MSFT) may make a bit more sense, though, as they can incorporate GoPro’s cameras into their existing product lines.
UA is in the midst of an image makeover that has repositioned the company as a wearables firm with a strong presence in the digital world. Adding GPRO to its product portfolio would fall inline with UA’s initiatives and boost the company’s tech offerings.
Stocks That Should Be Bought Out: Biogen (BIIB)
Potential Buyers: Allergan, Merck
The healthcare sector is certainly ripe for consolidation as the industry has been struggling under the weight of a changing landscape, public scrutiny and tougher regulations. Worries about the growth prospects of Biogen Inc (NASDAQ:BIIB), as competition from rival firms increases, have brought the firm’s share price down in 2016, making now a good time for Big Pharma companies to consider a takeover.
BIIB is by no means small, but big names like Allergan plc Ordinary Shares (NYSE:AGN) and Merck & Co., Inc. (NYSE:MRK) might have the financial strength to make such a large purchase. At the moment, pharmaceutical companies are struggling with lower growth and M&A activity is one of the only ways they can significantly expand their portfolios.
Not only does BIIB offer a strong position in multiple sclerosis and Alzheimer’s treatments, but BIIB’s CEO George Scangos has announced that he is stepping down, further fueling takeover rumors. At the moment, BIIB stock is trading below $300 per share — a far cry from the near $500 highs seen in 2015. That gives companies interested in a takeover a good opportunity to capitalize on BIIB while the firm is in the midst of a transition.
As of this writing, Laura was long AAPL and NFLX stock.