CRITERION: It’s a takeover fire sale on the ASX. These companies are on the specials rack
Experts
Experts
Barely a day has gone by without a fresh takeover offer for an ASX-listed company, with suitors targeting both large and small stocks across numerous sectors.
The burning question, of course, is who is next?
While no-one’s quite sure about the reasons for the merger mania, likely factors are the subdued Australian dollar and trashed valuations – especially in the tech sector.
Such is the M&A fervour that three building materials companies are subject to offer: CSR (ASX:CSR), Boral (ASX:BLD) and Adbri (ASX:ABC).
Gallic group Saint-Gobain’s tilt at CSR was out of the bleu, but the Kerry Stokes bid for Boral was like shooting fish in a barrel, as Stokes’ Seven Group owned 72 per cent of the company already.
So too was Alcoa of the US and its offer for redundant local JV partner Alumina (ASX:AWC) – a move deemed as being two decades overdue.
Not surprisingly, predators are keenly eyeing the severely marked-down stocks. In the tech sector, Altium is subject to a $9 billion knockout bid from Japanese chipmaker Renesas, while Soprano Design is wrapping up its $75 million hit on Whispir (ASX:WSP) – a stock that once was worth $500m.
Last month the Salter Brothers tech fund applied the mercy rule and bid for small business lender fintech Prospa Group (ASX:PGL), which had lost 88 per cent of its value since listing in June 2019.
Jobs wrangler APM Human Services (ASX:APM) listed in late 2021 and fared little better, but the company is now being saved from the dole queue courtesy of a private equity offer at a monstrous 140 per cent premium.
Past attempts by market gurus to guess the next deal have been wide of the mark, but we won’t be too censorious: a slew of possible targets your columnist named a year ago – including Transurban (ASX:TCL), Aurizon (ASX:AZJ) and Myer Holdings (ASX:MYR) – forge on independently.
The lithium sector abounded with activity last year and the subsequent price meltdowns mean almost anything is vulnerable. That includes market leader, Pilbara Resources (ASX:PLS).
Crown Resorts was privatised amid damning findings about money laundering and other regulatory shortcomings. It’s almost certain the stricken Star Entertainment (ASX:SGR) will face the same fate – but how much value will be left for equity holders?
Still on gambling, Pointsbet (ASX:PBH) is left with its local operation after selling its US business. This residual rump arguably is undervalued and of interest to other sports betting operators amid likely sector consolidation.
In the healthcare sector, out-of-sorts hospital operator Ramsay Healthcare (ASX:RHC) was subject to a failed $20 billion takeover offer in 2022.
In the diagnostic sector, breast imaging play Volpara Technologies late last year was acquired by Lunit Inc, after a patchy listed history.
Some white-coated types reckon Integrated Diagnostics (ASX:IDX), the fourth biggest local provider, could be of interest, while even the $10bn market cap tearaway Pro Medicus (ASX:PME) could be on the screens of an established US rival (if only as a shadowy blur).
The funds management sector looks like being a hotbed of M&A activity, with Perpetual Group (ASX:PPT) fielding an unwanted offer from listed investment company Washington H Soul Pattinson.
Meanwhile, boutique manager Pacific Current Group (ASX:PAC) received takeover entreaties from listed peers Regal Partners (ASX:RPL) and GQG Partners (ASX:GQG), but declared a “broad strategic transition” was unfeasible.
Finally, the office sector is starting to show the belated effects of the pandemic.
Keep an eye on the diversified but office-heavy property trust Dexus (AXS:DXS), although transactions in the sector are more likely to be on a building-by-building basis with eroding price tags each time.
And remember: if these corporate plays don’t happen, you didn’t read it here.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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