Monday was a big day in mergers and acquisitions

Monday was a big day in mergers and acquisitions. Google (GOOG) bought Motorola Mobility (MMI) for $12.5 billion, Time Warner Cable (TWC) bought Insight Communications for $3 billion, Cargill purchased Provimi for $2.1 billion, and Transocean (RIG) offered a $1.43 billion bid for Aker Drilling. I believe Google was Monday's big winner followed by Transocean, if its bid closes. Time Warner Cable and Cargill both made good strategic acquisitions, but I do not believe they will get a lot of value with their moves. In this article, I analyze each of these four M&A events and provide insight on what each move means for today’s market.

The biggest acquisition announcement was Google’s purchase of Motorola Mobility. The company paid a hefty premium of 63 percent and paid cash for the $12.5 billion acquisition. GOOG experienced a decrease of 1.16 percent and MMI’s shares increased at a whopping 55.73 percent. This move allows Google to enter the hardware industry and vertically integrate its position in the smartphone industry. This positions Google to better compete with Apple’s (AAPL) iPhone as it will be able to manufacture its own phones for the Android platform, although other smartphone makers will still be able to run the Android software. I was personally surprised by this move, and expected Microsoft to strike first with the acquisition of a phone maker since the Windows Phone is struggling and the company will have to make a strong strategic move if it hopes to improve market share. It is useless to evaluate this acquisition based on earnings since Motorola Mobility’s value is in its patents and it has not recorded a profit as of late. It will be interesting to see if Microsoft follows Google’s lead and acquires a phone manufacture, as the market speculated with the sharply rising stock prices of Research in Motion (RIMM) and Nokia (NOK).

Time Warner Cable purchased Insight Communications, a private cable provider, for $3 billion in cash. This example of horizontal integration allows Time Warner Cable to expand market reach and add 750,000 subscribers to its base of 14.5 million subscribers. TWC decreased by only 75 basis points, which shows how investors believe that this was a good acquisition. At a price of $4,000 per subscriber, I believe that this is a pretty high price to pay for expansion. However, with cable companies being in a mature market threatened by substitutes including Verizon (VZ), DirecTV (DTV), and Dish Network (DISH), I expect more cable companies to merge in the next couple years and cut costs to stay competitive.