Stock market

3 FTSE 100 takeover targets

gave FTSE 100 2024 has done well so far. In fact, it has made a series of new all-time highs in recent weeks.

At the same time, Britain remains a hotbed of occupation activity.

According to the research of Evening standard and investment bank Peel Hunt,Companies worth more than £26bn have already agreed to be sold to other listed firms or private equity in 2024.

Even though footsy is in tatters, the volume of dealmaking suggests to me that there are plenty of stocks in the UK that buyers and private capital see as undervalued.

Let me tell you about three FTSE 100 firms that could be up for a bid.

Target number 1

Burberry(LSE: BRBY ) shares have fallen from their highs of just over a year ago. And its market capitalization has shrunk from around £10bn to just over £4bn.

The backdrop is the decline in demand for luxury fashion. Aberdeen Investment manager Sasha Kachanova recently told The Telegraph:Burberry remains a potential takeover target, especially at its current price.

Affordable, unique and desirable

In addition to Burberry’s low price (compared to peers LVMH Moët Hennessy And Hermes), Kachanova makes another good point. she said: “As the only British brand operating independently – a rarity in the luxury industry – it offers a rich heritage and the opportunity to expand its iconic product lines and accessories.

This is important because consolidation is the name of the game in the luxury sector. recently, Tapestry (owner of Coach, Kate Spade and Stuart Weitzman) has agreed to an $8.5bn acquisition. Capri Holdings (owner of Jimmy Choo, Michael Kors and Versace), although the US competition watchdog is trying to block the deal.

Given Burberry’s low cost and unique positioning as an independent, distinctly British luxury fashion house, it’s hard to believe it isn’t of interest to sector consolidators.

Target number 2

Standard Chartered (LSE: STAN ), with a market capitalization of around £20bn, is one of the five largest FTSE 100 banks. It has a unique footprint in the world’s most dynamic markets and trade corridors in Asia, Africa and the Middle East.

Its shares can currently be bought at a 33% discount to its tangible net assets. Directors chastised the market for undervaluing the stock earlier this year. And I think that can be read in part as an admission that the bank may be vulnerable to bidding.

Talk of a takeover

This was reported by the American financial site Bloomberg in January last year. First Abu Dhabi Bank Was working on the takeover of Standard Chartered. First Abu Dhabi confirmed this, but said it had decided not to proceed.

This year, UK deals site Betaville reported rumors of renewed interest in Standard Chartered. Speculation is that the interest is from the ‘Gulf region’.

Meanwhile, Ian Lance, co-manager of Temple Bar Investment Trust, Suggests potential wider interest. “If a major US bank wants to gain a foothold in Asian markets, it can buy Standard Chartered.” he told fund data website TrustNet.

Target number 3

Racket (LSE: RKT), the Cillit Bang-To-Dureux The consumer goods group has been in investor favor for some time now. It’s still the biggest of the three ‘takeover targets’ I’m highlighting today, with a market cap of more than £30bn.

However, consumer goods companies are as big as beverage giants Diageo (£60bn) and even Unilever (£105bn) have recently been touted in some quarters as potential takeover targets.

Obviously, but with a caveat

Director of Investments at Russ Mold, Broker AJ Bell, recently said:Reckitt looks like the most obvious takeover target on the FTSE 100 after its share price has fallen sharply following strategic mistakes and legal action over one of its infant formula products.

However, the lawsuit, which Racket is appealing, could potentially lead to billions of dollars in compensation obligations. So, while Mold sees rackets as the most obvious target for a footy takeover, he is quite right to acknowledge that:The big unknown is whether anyone will want to pounce now or wait for the legal issues to be resolved.

Last silly thoughts

I wouldn’t want to invest in Reckitt, Standard Chartered or Burberry just hoping to make a quick profit from a takeover bid.

No, to me, it’s a case that companies can often make good long-term investments when they have the kind of business characteristics and depressed market valuations that can be fundamentally attractive to trade or private equity buyers. .

Having said that, I expect the takeover of London listed companies to continue!


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