It’s one of the biggest mergers of the year.
And although these two companies aren’t household names, I wasn’t surprised. If you’re an Alpha Investor, you aren’t, either.
You’re already familiar with chipmaker Xilinx for being a growing leader in the space. Its products are helping to spearhead major tech trends like artificial intelligence.
But even if you’re not an Alpha Investor who knows about the company, you almost definitely have its chips in the internet-connected devices in your home.
And on October 27, Advanced Micro Devices — another one of the world’s largest chipmakers — announced it was acquiring Xilinx in a $35 billion deal.
When the deal closes in 2021, the combined company will be worth about $135 billion. So it’s no surprise that investors got excited. Over the week and a half following the announcement, shares of both companies spiked about 8% on the news.
Now, acquisitions of this size between high-quality companies don’t come around every day. They’re special situations. They fall into a category called mergers and acquisitions (M&A).
The great news is that market conditions right now are ripe for increased M&A activity — which means you have many new chances to profit ahead…
Now Is the Time for M&A
Like most business activities, M&A took a hit during the height of the COVID-19 pandemic. Uncertainty about future growth prospects made a lot of companies hesitant to make deals.
So, a lot of great, profitable U.S. businesses that might have looked into M&A are now sitting on plenty of cash. Some might use it to increase dividends … buy back shares … or spend it on research and development.
But according to accounting firm PwC, ones that want to create significant long-term value post-COVID-19 will start looking for acquisition targets to buy.
Because now’s the perfect time to do it. Pandemic-fueled market volatility has made prices for deals attractive. And with interest rates at historic lows, any borrowing needed to fund deals is cheaper than ever.
It’s no wonder M&A activity is back on the rise again.
In fact, data from Refinitiv shows that the combined value of announced M&As from July and August reached $256 billion. That’s the highest level for that two-month period in five years.
August alone saw nine deals worth $5 billion or more. That’s the most for the month since 1999. And deals in the tech sector — like AMD and Xilinx — are leading the way.
These stocks have been doing incredibly well so far this year. And as this activity continues to rise, we will see more opportunities like this…
You Can Get in on These Deals
Deals in the tech sector accounted for 27% of global M&A activity during August. That trend will only continue to accelerate.
It’s clear that tech is quickly becoming an even more essential part of our lives.
We’ve been increasingly relying on subscription software to work and learn from home … depending on e-commerce to get our shopping done … and using streaming to entertain ourselves in our free time.
The pandemic has only highlighted the need for this convenience. And it has sped up the trends powering growing, billion-dollar industries — industries that could hand you opportunities.
So, strong M&A signals will continue to come from the tech space in 2021.
And since we’ve already recommended the Vanguard Information Technology ETF (NYSE: VGT), you already have a chance to profit. This exchange-traded fund holds a basket of 330 tech stocks — some of which could become prime acquisition targets in the future.
But keep in mind, mergers and acquisitions are just one kind of special situation to profit from. There are other special situations that can hand you even bigger gains in the market — especially in the tech sector.
And Alpha Investor Editor Charles Mizrahi is keeping a close eye on one type of special situation in particular.
He even sees three profit opportunities involving this kind of situation right now. Each one could potentially hand you 500% gains in the next five years.
Now, Charles wants to make sure everyday investors just like you can get in on them. That’s why he’s been working on an exclusive project to reveal all the details on Thursday, November 19.
But this project is invite-only. So, if you want to gain access to it next week, be sure to sign up right now to reserve your spot. You won’t want to miss it!
Regards,
Lina Lee
Managing Editor, Alpha Investor
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