As I was getting ready for class this morning my Dad called me to let me know that it was being reported the Department of Justice was expected to allow the Live Nation merger with Ticketmaster. While I was expecting the merger to eventually be approved, the timing could not be better. The market is shaky right now and both companies are holding steady but it only reasons to expect that the prices of these stocks would be driven lower if the market continued its down trend. Even news of government clearance probably would not have helped the stocks weather last weeks storm. The fact that news broke today signaled to investors that Live Nation was worth buying and the price rose 15%.

Now, I bought Live Nation around $4.50 a share in the Spring so it has essentially doubled in that time. Today was a great opportunity for investors to sell into the merger and take strong profits. At the same time, Live Nation is still a very good company and I believe has the ability to go as high as $15 in the next 6 months.

Has the buying window for Live Nation been missed? Personally I would have probably bought as soon as the merger was approved in the UK about a month ago. Nonetheless, the company is still good and I believe in what they do and the potential their services have. The reality is that now Live Nation and Ticketmaster will form a company whose only real competition is AEG. In other words, the company SHOULD be more dominant than ever and in turn should be an even more attractive company to own.

Anytime there is a merger it is important to be cautious as an investor. Many mergers do not help the stock per se because the potential of the merger actually does more for the stock than when the deal is completed, the 15% increase in Live Nation today is a prime example of this notion. It is unlikely the stock will go up 15% in one day again anytime soon.

This entry was posted on Monday, January 25th, 2010 at 4:26 pm and is filed under Stocks.