How to Profit From Corporate Mergers

Investors looking to cash in on the merger boom might consider stocks in companies with a track record of successful acquisitions.

Every week, it seems, brings news of a corporate coupling (or at least an invitation). Buyouts are brisk in industries ranging from technology to health care, from finance to consumer goods. To get an idea of the frenzy, consider the food fight Hillshire Farms got caught up in as a bidding war for the sausage maker broke out between Pilgrim’s Pride and Tyson Foods. That followed Hillshire’s bid for Pinnacle Foods, known for Vlasic pickles and Duncan Hines cake mixes.

Halfway through 2014, U.S. companies had announced more than 9,000 deals (counting minor ones, including those for parts of businesses), with a collective value of more than $771 billion. That compares with 8,600 deals worth $488 billion in the first half of 2013. “We’re on track for the first trillion-dollar year since 2007,” says Richard Peterson, who tracks merger activity for S&P Capital IQ. He says the value of U.S. deals for the full year could reach $1.5 trillion, compared with $1.7 trillion in 2007.

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Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.