M&A Deals Lift Stock ETFs

Stock exchange traded funds rose Monday morning after a six-week losing streak as several corporate deals helped lift equities.

VF Corp. (NYSE: VFC) announced a $2 billion deal for Timberland (NYSE: TBL). VF shares vaulted about 11% while Timberland surged more than 40% on the news.

The deal implies a 43% premium to the Friday closing price, although the takeover price is still slightly below Timberland’s 52-week high, Wall Street Strategies said in a note.

“To be clear, this is a fantastic deal strategically and valuation wise for VF Corp … and follows a swift decline in Timberland shares as it missed badly on first-quarter earnings,” the analysts wrote. The deal provides “sourcing opportunites” as Timberland’s platform is combined with North Face. The Timberland brand has “global awareness,” they added.

Retail HOLDRS (AMEX: RTH) was up nearly 1% in morning trade Monday.

In other M&A news, insurers Transatlantic Holdings (NYSE: TRH) and Allied World Assurnace (NYSE: AWH) said they plan to combine in a $3.2 billion merger. Both stocks are held in PowerShares KBW Property & Casualty Insurance Portfolio (NYSEArca: KBWP). Transatlantic shares rallied 12% while Allied World Assurance dropped about 2%.

Wendy’s/Arby’s Group (NYSE: WEN) jumped 5% after the company said it was selling the Arby’s chain to Roark Capital Group. First Trust Consumer Discretionary (NYSEArca: FXD) rose fractionally.

Gerber Scientific (NYSE: GRB) shares soared 34% after the company said it has agreed to be acquired by Vector Capital. PowerShares Zacks Micro Cap (NYSEArca: PZI) rose 0.5%.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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