Futures for the S&P 500 index jumped early Monday morning following the latest tax-cut news and new M&A buzz. CVS Health ( CVS ) will buy Aetna ( AET ) for $69 billion, trying to prep for a possible Amazon.com ( AMZN ) entry. Meanwhile, Walt Disney ( DIS ) reportedly is in talks again with 21st Century Fox ( FOXA ). Separately, Bitcoin jumped to fresh record highs, before paring gains.
[ibd-display-video id=2385970 width=50 float=left autostart=true] The U.S. Senate on Friday night approved legislation to cut the corporate tax rate to 20%. House and Senate Republicans will work this week on reconcile their versions.
The major market averages rallied last week on tax-cut hopes. Shares initially plunged Friday after ABC News reported that national security adviser Michael Flynn was ready to testify that President Trump ordered him to contact Russian officials during the presidential campaign, but the S&P 500 and other averages slashed losses as it turned out the actions took place after the election.
S&P 500 index futures leapt 0.7% vs. fair value. Dow futures jumped 1%. Nasdaq 100 futures rose 0.6%. Treasury yields rose in extended trading.
CVS Health will pay $69 billion for Aetna , the companies announced Sunday afternoon, confirming widespread reports. Including assumed debt it’s a $77 billion deal.
CVS will pay $207 a share for Aetna, $145 in cash and 0.8378 CVS share. That’s a 29% premium to Aetna’s close on Oct. 25, just before reports of talks surfaced. Aetna closed Friday at 181.31.
The deal combines the huge U.S. drug store operator and pharmacy benefits manager with a health insurance giant. In some ways CVS and Aetna are following No. 1 insurer UnitedHealth (UNH), which also owns a PBM. But CVS appears to be trying to get out in front of Amazon, which reportedly is eyeing the pharmacy distribution business.
Walt Disney has renewed talks to buy much of 21st Century Fox, the Wall Street Journal reported over the weekend, adding that Comcast (CMCSA) is still a player. Disney talks with 21st Century Fox continue focus on the 20th Century Fox movie and TV studio, some U.S. cable networks and international assets such as Fox’s 39% stake in U.K. satellite TV broadcaster Sky. The Fox broadcast network, Fox News and sports channel FS1 aren’t on the table. But Fox’s 30% stake in internet TV operator Hulu is available. Disney and Comcast also each own 30% of Hulu.
Bitcoin surged back above $11,000 over the weekend. Bitcoin hit a record $11,831 on Sunday morning, dropping to below $10,500 before moving to $11,500 early Monday morning, according to Coinbase.com . On Friday, the CFTC gave CME (CME) and CBOE (CBOE) the OK to launch Bitcoin futures. CME says its Bitcoin futures will launch on Dec. 18.
IBD’S TAKE: Are Bitcoin, Ethereum and other digital currencies real investments or a speculator’s game? Individual investors should be extremely cautious about diving into this new area. Read this feature about Bitcoin risks and possible gains first.
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