The companies aren't oblivious to this difficult environment. It isn't just that they look at the futures and say, "Uh oh, here comes another bad one" -- the reaction we all feel today. No, it doesn't work like that. They realize that growth's been lowered worldwide and that they can't do it on their own because they don't have critical mass and they have to give up and get together with others in their industries to bring out value.
Black & Decker (NYSE: BDK) (Cramer's Take) and Encore (NYSE: EAC) (Cramer's Take) came to this exact same conclusion at the same time. They just can't make more money for their shareholders independently than they can with other partners. With Encore settling for Denbury's (NYSE: DNR) (Cramer's Take) bid and Black & Decker agreeing to be acquired by Stanley Works (NYSE: SWK) (Cramer's Take), both are settling for about half of what their companies were worth two years ago. But the world has changed in two years, and a lot of the rosy scenarios that justified being independent have to be reconsidered.
Black & Decker did everything it could to streamline and restructure and make money for people. But there was no way, at least in their minds, that they could get this stock back to where it was before housing went kerflooey. I was surprised they sold for so little given how the stock was above the $70s for ages. But it was in the $20s recently and management didn't want to wait for the housing cycle to roar again.
Encore's a little more difficult to understand. Why did they capitulate? They had great properties in great areas like the Anadarko basin in Oklahoma, and the Williston in Montana and South Dakota. They clearly could have stayed independent. Again, though, they wanted to do what is right and make some quick money for shareholders by joining forces with an outfit, Denbury, with far too much Gulf of Mexico.
The common theme here is one of the recognition that even if the economies worldwide turn around, it just ain't worth it to go alone. You need partners, and when they come calling you take their money or their stock and you move on!
Random musings: I like a setup when the futures take us down for the sins of Europe. Around 10 a.m., we begin to ask ourselves why we are down at all!
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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