Exxon Mobil Buys Pioneer, Hotter-Than-Expected PPI, Birkenstock Goes Public 10/11/23

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Jim Cramer (0:31)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:39)

Good Wednesday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Pre-market hanging on to some gains even as September PPI runs a bit warm, stirring some jitters about CPI tomorrow. Meantime, biggest M&A deal of the year, an Exxon Pioneer.

Birkenstock going public today will keep the NYSE floor busy.

A roadmap begins though with PPI coming in a bit hot. Investors also digesting some Fed speak from Daily, from Kashkari, monitoring the Israel-Hamas war with Secretary Yellen saying nothing's off the table for Iran sanctions.

David Faber (1:11)

Plus Exxon Mobil agrees to buy Pioneer. It's about a $60 billion all-stock deal. We will of course give you the latest. And it's another big test for the IPO market this morning. Shu Brand, Birkenstock, making its public debut. That's how they pronounce it. You're into it. Right here at the NYSE. The CEO is going to join us here at Post 9 That will be in the next hour. All right, let's start with that massive deal in the energy sector. Exxon Mobil agrees to buy Pioneer. The price tag, $253 a share. It's all Exxon stock. So in this case, when Exxon moves down, the overall value of the deal is impacted. Therefore, it is no longer $253, but not that far off from that price. They are talking about significant synergies, as much as $2 billion, total annual average value over the next decade, 2.3234 Exxon Mobil shares, it's an 18% premium. A little background that I got, Jim, obviously want to get your take, you know this company Pioneer so well.

My understanding is, having spoken to people familiar with the old situations, we like to say that they've been kind of talking on and off for two years.

But things only sort of got more serious of late. We've talked about the spring and what may or may not have happened there, but really it's more recent than that. And it does seem to be tied at this time as to why I was able to get to the finish line, in part because Mr. Sheffield is having succession, he is stepping down at the end of the year.

Apparently as well, there was a belief that his people, so to speak, are going to be treated well, that's what I've been told in the sense of that synergy number I just shared is going to result potentially in some people losing jobs, as is often the case, and there's a feeling that it will be equally shared. That was something I'm told was important to him. But the premium itself, not that large, Jim, and I know you were in the camp that thought perhaps they would get a higher number and you're not alone in that.

As we had reported on Monday, most likely would be all stock, and it is, and Exxon showed price discipline.

Jim Cramer (3:15)

Yeah. Okay. So is it a huge position for my travel trust? I've wanted for some time. One of the reasons why we bought it was because we liked Mr. Sheffield. When Mr. Dooley was appointed to be a CEO designate, so to speak, at the end of the year, I thought that for sure this would be the long run that I wanted for Pioneer because I think it had below us finding costs. Mr. Sheffield built the best company in the Permian.

I have tremendous regard for Exxon.

I will sell every share of Pioneer the moment I want because I have tremendous regard for my travel trust's performance and this is not what I want.

David Faber (3:50)

But it is an all stock deal. In other words, you are going to be a beneficiary if, in fact, they deliver on those synergies, if they do bring the price down to as little as $35 a barrel in terms of production cost over time, right? So would you not want to just roll into it?

Jim Cramer (4:04)

I like my fourth business. It's got more growth. I don't want to deal with this overhang. One of the reasons why we bought Pioneer is because Mr. Sheffield has said to us that we will own the largest dividend producing stock in the S&P 500 We will not after that.