Stock market

1 potential takeover target from the FTSE 250

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There is a lot of interest in UK companies at the moment from a takeover perspective. And there is one FTSE 250 A company that I think could be a viable acquisition target.

I share. Dr. Martins (LSE:DOCS) has fallen 79% since its initial public debut in 2021. And it’s gotten to the point where the possibility of a takeover looks increasingly plausible.

Speculation?

The idea of ​​Dr. Martins being acquired is not mere speculation. Earlier this week, one of its major shareholders called for a strategic review considering the possibility of a takeover as the stock jumped.

Mario Sibelli – managing member of Marathon Partners Equity Management – ​​said the company’s going public was not in the best interests of shareholders. Instead, management should sell.

According to Sebeli, the business could be sold for about $2 billion to someone who could streamline and improve its operations. This is 70% more than the current market value of the company.

This is an attractive return for investors. But when I’m buying shares of Dr. Martins for my portfolio, it’s not because I think there’s an opportunity to sell them to someone at a higher price.

An undervalued stock

Cibelli said the company’s share price does not accurately reflect the intrinsic value of the underlying business. And I agree with that, but that makes me want to buy it, not sell it.

So I don’t want the company to be taken private or sold to a bigger competitor. I would rather keep contributing to the business while I think the shares are a bargain.

It is certainly true that Dr. Martins is facing a difficult business environment and has made it worse with his mistakes. So there is clear risk in owning the stock going forward.

As I see it, though, there’s an opportunity to buy a stock that’s trading at a bargain price right now. So I will avail myself instead of presenting it to someone else.

Who will buy it?

If management decides to look for a buyer, I don’t think it will be short of options. stands before me as a possible candidate. Decker Outdoor (NYSE:DECK).

Deckers owns a brand of running shoes. It happened And he has his own boot brand. Ugg. I can see Dr. Martins fitting in well with him as part of his lineup.

Additionally, the company has done very well recently. At a time when competitors are struggling with a tough economic situation, the business has grown sales impressively.

I think maybe Deckers has the ability to cure Dr. Martin’s illness. And with its own stock trading at a price-to-earnings (P/E) ratio of 32, it could also be an arbitrage opportunity.

Stocks to consider buying

I have been buying shares of Dr. Martins for my portfolio and I intend to continue to do so. That’s because I think it’s good value, though, not because I think a takeover could be on the cards.

I wish the company wasn’t taken private – while that would likely increase the share price, it’s hard enough to find undervalued stocks as it is. But if it does, there’s not much I can do about it!


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