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Putnam Counts On Big Acquisitions
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Mullin said he doesn't expect a repeat from the Charlotte-based bank's $33.1 billion takeover of MBNA, the biggest U.S. independent credit card company. The transaction will lower funding costs for Wilmington, Del.-based MBNA and allow Bank of America to cross-sell its services to owners of MBNA accounts, of which there are more than 20 million, he said.
"They have gotten much better about the price they pay for businesses," Mullin said.
Bank of America's stock is down 8.4 percent since the start of the year, compared with the 4.9 percent decline of the S&P 500 Financials Index.
Mullin said he was drawn to Johnson & Johnson, the world's No. 1 maker of medical devices, partly because of its consistent profit growth. The New Brunswick, N.J.-based company reported annual profit increases of at least 10 percent for the past 20 years, excluding charges.
The $24.2 billion purchase of Guidant, the No. 2 maker of implantable defibrillators, will help extend that streak by offsetting sales declines for some of its prescription drugs, Mullin said.
"They have been very successful in integrating prior acquisitions and in the case of Guidant, we anticipate more of the same," he said. Johnson & Johnson's stock is down 0.1 percent this year, trailing the 4.4 percent advance of the S&P 500 health care index.
Johnson & Johnson is waiting for U.S. antitrust clearance to acquire Indianapolis-based Guidant, the biggest takeover in its 119-year history.
"One of the interesting things is that you can never really go back and figure out what would have happened if they hadn't done the deal," Mullin said. "It's tough to say what if it had gone differently."
