Today we are watching…
1. Alstom (#alstom)
This French rail company is expanding its passenger rail network with the acquisition of Bombardier’s train business. Rumors of the $7 billion consolidation were made concrete yesterday when Alstom agreed its part cash, part stock deal, but antitrust bods might yet step in. The combined divisions would control over half the market for electric carriages and have a leading position in Europe’s transport niche. If Alstom gets away with it, it will be a big win against competition from China. CRRC Corporation is increasingly targeting global sales of its rail infrastructure. The only form of defense might be for the European Union to grant this mega-merger!
2. Kroger (#kr)
Warren Buffett has gone in for Kroger, his first deal in a long while due to the expensive nature of today’s market. Kroger is a classic Buffett play. We’ll always need to eat, and we’ll always buy food. He may see Kroger as a consumer-facing company that could ride a downturn with relative ease, exercising pricing power to hug the inflation curve tight. Reward programs and product differentiation could lead to profit margins expanding as well, but that upside story isn’t very convincing with Amazon and discount supermarkets like Aldi in the mix. Kroger isn’t setting the Invstr Forum on fire with only 89 bulls. However, only 9% are putting it down. According to one of the best investors of all time, this grocer is a good hedge at a good price!