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Rite Aid Corp. has finally cleared antitrust hurdles to add 1,800 new drugstores to its ledgers.
Flextronics becomes plans a more competitive stance by bidding for Solectron, and private equity buys out a subprime lender.
The Merger Fund shows that the M&A trend is strong, and makes investors good money.

M&A Activity: Merger Mania Monday

For a Monday, it's a busy day on Wall Street for merger and acquisition news. Even with the Chinese stock meltdown that's affecting most markets around the world, the Dow is still only maintaining a 14-point loss in the late afternoon, while the S&P is slightly up and the Nasdaq slightly down.

The big retail story is that Rite Aid Corp. (RAD:NYSE) has finally completed its acquisition of Brooks and Eckard drugstore chains after the U.S. antitrust authorities cleared the way for the deal. The 1,800-plus drugstore fronts that Rite Aid now has rights to are owned by Jean Coutu Group Inc. (PJC.TO).

The FTC agreed to the deal after Rite Aid and Jean Coutu decided to sell 23 storefronts in markets around the United States that were under antitrust contention. WalGreen Company (WAG:NYSE) and Weis Markets Inc. (WMK:NYSE) will pick up some of these stores.

This acquisition gives Rite Aid over 5,000 stores, and allows it to be much more competitive in the drugstore retail sector. According to the company, Rite Aid will see a net loss for 2008 because of the integration expenses related to the deal, however it expects $155 million in acquisition-related costs.

Rite Aid has actually performed fairly well for 2007, up 18% for the year. It's moved 81% in value, to its current price of $6.51 since early 2006. RAD still has a way to go this year, as it's not completely overbought. Technically, it could hit $10 per share if the stock can bypass the strong 50% Fibonacci retracement it's currently trading below.

M&A Activity: Tech Stocks and Private Equity Deals

On the side of tech, Flextronics International Ltd. (FLEX:NASDAQ), which makes electronics for other companies to retail, is buying Solectron Corp. (SLR:NYSE) for $3.6 billion. SLR is a manufacturing and supply chain leader in industries as diverse as aerospace and engineering and consumer products.

Shareholders of SLR can choose to receive a strange 0.345 per share of Flextronics, or a cash reimbursement of $3.89 per share. Flextronics expects this acquisition to add $30 billion annually to its bottom line.

FLEX stock traded up from Wednesday through Friday before the deal was announced. Today, as is customary with the stock movement of the company doing the acquisition, FLEX is down over its 200-day Moving Average. SLR is up on a gap to $3.87 per share, as FLEX's asking price for the company is a 15% premium over its close on June 1.

Private equity is also in the limelight again today. Following a tough year for subprime lenders, Accredited Home Lenders Holding Co. (LEND:NASDAQ) is going private in a $400 million deal, or $15.10 per share.

The asking price for LEND is 72% less than the company's stock was trading for at its high in May 2006, and even 50% less than it traded in February 2007.

M&A Activity: Merger Fund Making Strong Gains

To put the entire merger and acquisition trend into perspective, the Merger Fund (MERFX) has moved from a value of $15.64 in the beginning of 2007 to $16.38 currently, a gain of 4.73%.

The fund moved from $14.70 to $16.27 per share, a gain of 10.7% in 2006. Since 2007 is slated to be a record year, both domestically and globally in the M&A industry, we could very well see the MERFX hit as high as $18 by the end of the year.

The Merger Fund (MERFX) invests in companies that are publicly involved in mergers and takeovers as well as leveraged buyouts and spin-offs.

You can learn more about the Merger Fund here.

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Ann Sosnowski is a small and mid-cap stock analyst for Taipan Financial News. She is the editor of Diligent Investor, a monthly newsletter that balances conservative and moderately risky investments that pertain to current market trends. She is also the editor of Diligent Investor Micro-Cap Hot Sheet, a monthly newsletter that finds the hottest penny and micro-cap stocks on the market.

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