Deals

Tara Lachapelle is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Brooke Sutherland is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Another year is coming to a close, but as we look ahead to 2017, deals will surely abound. After studying the stars, we present to you our top M&A predictions as told through horoscopes. Below are CEOs and top executives -- matched with their zodiac signs -- who may be involved in deals next year:

Aquarius 1/20-2/18
Bob Iger, Chairman and CEO of Walt Disney Co.

Aquarius, you are the water bearer, providing the nourishment your company's shareholders count on. In return, Disney has had the fortune of eternal youth -- until now, that is. This year has been unusually challenging and you may be feeling the time is nearing to step aside. But as the respected leader and dealmaker you are, you must go out on a high note. There may be one last big transaction in your future which is unlike all your others. Think to yourself, is there a part of Disney that no longer feels harmonious with the rest of the Magic Kingdom? A sports network perhaps? Then it may be time to let it go

Breakup Prediction
Disney would be a much smaller company without its ESPN and ABC networks, but it'd have fewer headaches and a better growth outlook. Apple might even want to buy Disney as a result.
Source: Bloomberg

Pisces 2/19-3/20
Robert Kotick, CEO of Activision Blizzard Inc.

Pisces, are you fishing around for another acquisition? Your employment contract is certainly giving you the incentive to do so, promising a nice reward if Activision's market value increases 15 percent through at least one transformative deal. The video-game developer you lead still has much cash -- $4 billion to be exact -- even after buying Candy Crush maker King Digital in early 2016. It's your call of duty to spend that money wisely. Take-Two Interactive Software Inc., the $4.2 billion maker of Grand Theft Auto and a perennial takeover candidate, is still out there. And while it's not cheap, after the stock surged 41 percent this year, it has a decent pipeline of new games and revenue is set to rise 13 percent next year and 22 percent the next. You might find it worth another look.  

Gauging Deal Firepower
Activision Blizzard's net debt is about the same as the Ebitda the video-game developer is forecast to earn in 2017:
Source: Bloomberg

 ♈Aries 3/21-4/19
Shari Redstone, part of family which controls CBS Corp.

Aries, like the fire sign that you are, you've ignited much this year: a feud in the upper ranks of Viacom Inc. and deal discussions between Viacom and CBS -- discussions which you later extinguished. As such, you're largely misunderstood by Wall Street. There was logic to your plan to recombine CBS with Viacom, but only if CBS didn't have a better offer. In 2017 it might, and perhaps you already know that and your recent actions were thus shrewd. As the media industry becomes a melting pot, CBS, as one of the strongest players, could attract the likes of Apple Inc. Alternatively, should CBS see an opportunity to expand its sports content cheaply via a deal with ESPN, you could find Aquarius in your orbit. 

 ♉ Taurus 4/20-5/20
Bill Ackman, CEO of Pershing Square Capital Management

2016 may be the most hated year since the recession, but for you, Taurus, it was especially bad. Is 2017 your hedge fund's long-awaited comeback year? It may be, but the catalysts are also partly out of your control. See, you were bull-headed about a particular terrible pharma investment and it continues to punish you. However, another stock holding of yours could prove fruitful and finally be what carries you out of this enduring rut. Mondelez International Inc. -- which makes snacks like Oreos that get you through such hard times -- is poised for a deal. Whether Mondelez endulges its sweet tooth by acquiring Hershey Co. or welcomes a takeover offer from deal-hungry Kraft Heinz Co., you stand to win. Hopefully those Chipotle burritos you like so much don't derail things, though.

Ack, Man!
Bill Ackman's hedge fund had a rough 2016, but with foodmaker Mondelez potentially in play and the possibility that Chipotle recovers, 2017 could turn out better
Source: Bloomberg

Gemini 5/21-6/20
John Legere, CEO of T-Mobile US Inc.

Gemini, you've made your mark as the sassiest of CEOs but also one of the most clever. With your leadership, T-Mobile overtook Sprint Corp. as the third-largest U.S. wireless carrier, it's snatched customers away from AT&T Inc. and Verizon Communications Inc., and now it's among the industry's most attractive takeover candidates. If you can keep the momentum going, 2017 will be your year to bring T-Mobile shareholders the final windfall they've been awaiting. With Federal Communications Commission Chairman Tom Wheeler resigning next month as President-elect Donald Trump takes office, a merger between T-Mobile and Sprint is finally possible. But you know there are others looking. Let them fight over you. 

Gemini is represented by the twins, so we have another for you:

Jim Koch, Chairman of Boston Beer Co.

Boston Beer isn't just a business for you, it's your baby. You built one of the country's largest craft brands -- Sam Adams -- and naturally don't want to give it up. However, an opportunity could present itself that changes your mind. As companies like Constellation Brands Inc. (run by another Gemini!) look for premium beer brands to add to their portfolio, Boston Beer could wind up on their shopping lists. Your stock has fallen 40 percent since 2014 as revenue growth stalls. Rather than reject the idea of a deal, best to let it ferment. This could be your chance to exit with a handsome takeover premium and leave behind a rich legacy.

Packing a Punch
Boston Beer's premium pricing generates more revenue per hectoliter, which is exactly what acquirers such as Constellation Brands are looking for
Source: Bloomberg

♋️ Cancer 6/21-7/22

See footnote

Leo 7/23-8/22
Michael Ferro, Chairman of Tronc Inc.

Leo, you certainly made an impression in 2016. You acquired a large stake in Tribune Publishing at a discount, but then demanded Gannett Co. raise its offer for the company (which you inexplicably renamed Tronc) to dizzying premiums. Your stubbornness almost made you look like a tactical genius, but in the end, the high price you pushed for proved too much for the USA Today owner. So now what? You’ve been effective at cutting costs, and that’s kept your valuation somewhat afloat. But it will take lion-like strength to transform Tronc into the tech-savvy powerhouse you envision. You can feel shareholders watching, ready to demand a sale should you stumble. If Gannett resurfaces as an acquirer, don't let your pride prevent you from sitting back down at the bargaining table. 

War of Words
Tribune, er Tronc, shareholders have had quite a ride in 2016
Source: Bloomberg

Virgo 8/23-9/22
Warren Buffett, Chairman and CEO of Berkshire Hathaway Inc. 

Virgos are known to be reliable, and we can always count on you to deliver a deal shareholders will love. But despite all your acquisitions, the immensely profitable conglomerate you've built generates cash far faster than you can invest it. So is a particularly monstrous transaction entering your zodiac house, Virgo? Your latest target, Precision Castparts, helped Berkshire's manufacturing division post its best quarterly return in at least two years. As you prepare to hand over the keys to the kingdom, it would be wise to make your successor as involved as ever in your next purchase. Doing so may help Berkshire's next CEO earn investors' trust when he takes over and also help him ward off any eventual calls to break up the $407 billion company. Your next deal is a crucial one.

Elephant Gun
What's Warren Buffett targeting next? Can't let this cash just sit around
Source: Bloomberg

Libra 9/23-10/22
Werner Baumann, CEO of Bayer AG

It's fitting that a Libra, for whom partnership is all-important, struck one of 2016's biggest deals. But your $66 billion acquisition of seed giant Monsanto Co. isn't sealed yet. You will need your powers of diplomacy to win over regulators, a task complicated by China National Chemical Corp.'s concurrent $46 billion takeover of Syngenta AG and Dow Chemical Co.'s merger with DuPont Co. Your biggest challenge, however, will come after the deal closes. You need to justify your expensive bid by executing on the $1.5 billion of synergies you promised, draw on your characteristic charm to mollify #Monsatan critics and figure out your corporate identity. If a significant portion of your revenue is tied to seeds and crop chemicals, is that animal-health unit still a good fit? You're already selling some assets, but you could create more value with a bigger breakup of the agricultural and human health-care businesses.

Scorpio 10/23-11/21
Bernardo Hees, CEO of Kraft Heinz Co. and partner at 3G Capital

Scorpio, you are venomous to costs, which is why Kraft Heinz has become a much more profitable company since your team took over, having engineered the 2015 merger of the two food brands. But revenue growth is neither easy to come by in this industry nor is it your forte. Another megamerger will enter your constellation in the new year. Taurus desperately hopes it's a deal with his Mondelez, but an even stronger case can be made for General Mills Inc. or Kellogg Co. because of the deeper cost-cutting that can be done at those businesses. 

Krafting A Merger
Under 3G Capital, Kraft Heinz's margins have expanded. But it's going to need more M&A to spruce up a weak outlook for sales growth:
Source: Bloomberg

Sagittarius 11/22-12/21
Greg Hayes, Chairman and CEO of United Technologies Corp.

Sagittarius, you're known as a great adventurer with a penchant for excitement and action, but the same can't be said for your stock price. You spurned a takeover offer from Honeywell International Inc. that would have unlocked billions in cost savings and then didn't have much of a backup plan. You don't have to give up the independence you cherish, but you do have to do something. Your symbol is the Archer; is there a large target you can aim for? Starboard Value LP may try to convince you to set your sights on Rockwell Collins Inc. But separating your aerospace operations from the climate-controls and elevator divisions offers another path to increasing value. Rely on your creative nature: Perhaps you can engineer both a deal and a breakup at the same time. 

Playing Catch-Up
United Technologies' valuation trails its peers and has eroded over the past few years
Source: Bloomberg

Capricorn 12/22-1/19
Olivier Bohuon, CEO of Smith & Nephew Plc

Capricorn, you are truly mystifying. Not only is your zodiac sign a sea-goat, but your horoscope has been wrong many times. Each year your company tops the lists of European or health-care acquisition candidates, and yet here you are, still a goat swimming amongst the stars. But we are calling it: 2017 is the year Smith & Nephew finally gets bought. Your stock has been flat since 2014 and is trading at an increasingly wide discount to rival and likely suitor Stryker Corp. The tepid performance also makes any potential offers that much more palatable to your investors. As demand for hip and knee replacements rises alongside an aging population, could Stryker finally strike? If not, make it 2018.

Widening Spread
A merger of these two medical-device companies has seemed years in the making, but still nothing yet. As Smith & Nephew shares get cheaper relative to Stryker's, will the odds of a deal go up?
Source: Bloomberg

 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. If you're wondering why Cancer isn't on this list, none of our top M&A predictions for 2017 involved CEOs born on those dates and we didn't want to force it. What's more, a study from 2012 found that the smallest percentage of CEOs have been born in those months. So maybe that explains it!

To contact the authors of this story:
Tara Lachapelle in New York at tlachapelle@bloomberg.net
Brooke Sutherland in New York at bsutherland7@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net