TheStreet.com's Jim Cramer says opportunistic mergers help deliver value to shareholders during difficult times.

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.

In North America, the big focus for independent exploration and production firms is on natural gas. Yet, there is still a good amount of oil to be tapped (assuming prices remain relatively high).

So this week, Denbury Resources (NYSE: DNR) capitalized on the opportunity by shelling out $3.2 billion for Encore Acquisition (NYSE: EAC). It's not cheap, coming at a 35% premium. Yet, the deal will create a powerhouse in oil exploration and production in North America.

interestingly enough, in a sign that credit markets are loosening up, JPMorgan (NYSE: JPM) has agreed to provide a revolver of $1.25 billion to bridge the deal.

TheStreet.com's Jim Cramer wonders whether the big selloff was caused by anxious managers locking in profits.

What happens if it is was mostly lock-in action? What if the big themes that everyone so feared weren't so big, and that the selloff -- so ugly, with so much damage -- was just technical and remains that way?

Besides my oft-repeated statement that I don't expect a pullback to exceed 7%, I think this market didn't make a lot of sense last week.

Here were the big themes: dollar getting stronger, causing a decline in minerals and resources; industrials faltering; recession stocks roaring back.

Analyst upgrades:

• Jefferies upgraded Warner Chilcott (NASDAQ: WCRX) to Buy from Hold. The firm views Warner Chilcott's acquisition of P&G's (NYSE: PG) pharma business as a positive given its attractive product fit and purchase price.
• ThinkEquity upgraded Google (NASDAQ: GOOG) to Buy from Source of Funds and raised its target to $550 from $400. Previously, the firm thought Google Street estimates were too high and that low single-digit growth in Q2 and Q3 would cause multiple contraction. They said their thesis played out fundamentally but they were wrong on the stock. Given Q2 has past, the analyst raised estimates above consensus and expects an in-line Q3 and for shares to outperform as the economic cycle turns.
• Bernstein upgraded Diageo (NYSE: DEO) to Outperform from Market Perform and views Diageo's valuation as attractive. The firm expects 2H09 results on August 27 to mark a bottom in weakening top-line trends.
• Costco (NASDAQ: COST) was upgraded to Market Perform from Underperform at William Blair.
• Lowe's (NYSE: LOW) was upgraded to Overweight from Equal Weight at Morgan Stanley.
• Siemens (NYSE: SI) was upgraded to Buy from Neutral at BofA/Merrill.

MOST NOTEWORTHY: BioForm Medical, Hexcel and Genesis Energy were today's noteworthy initiations:

• Jefferies initiated BioForm Medical (NYSE: BFRM) with a Buy rating and $12 target and believes the risk/reward is positive given the company's differentiated technology and the strong growth dynamics of the dermal filler market. They also think the possibility of a takeout provides a valuation floor in the stock.
  
• UBS believes Hexcel Corp. (NYSE: HXL) will grow faster than other aerospace suppliers given the production ramp in composite rich aircraft. The firm assumed coverage with a Buy rating and $30 target.
  
• Wachovia expects Genesis Energy (AMEX: GEL) to benefit from recently announced acquisitions, strong tertiary oil recovery activity by Denbury Resources (NYSE: DNR) in Mississippi, and growing industrial gas segment, starting shares with an Outperform rating..

OTHER INITIATIONS:

• Banc of America initiated Dollar Tree Stores (NASDAQ: DLTR) with a Neutral rating and $30 target.
  
• JP Morgan initiated First Horizon National Corp. (NYSE: FHN) with an Overweight rating.
  
• Sandridge Energy (NYSE: SD) was started with an Overweight rating at Lehman, a Neutral rating at Goldman and a Peer Perform rating at Bear.