Mergers and acquisitions (M&A) activity is a potential way that the price of a share may increase. We’ve already witnessed Heinz’s share price reach an all-time high this year following Warren Buffet’s acquisition and here are three more which may be set for a boost
Aruna Karunathilake, Portfolio Manager, Fidelity UK Select Fund:
Johnson Matthey: “Johnson Matthey is a FTSE 100 chemicals business with a strong competitive position in auto catalysts. With regulations on car emissions becoming ever-tighter, and constraints in the supply of raw materials needed to manufacture them, the company could grow its sales by as much as 10% across the cycle. This high growth and leading market position could be viewed as attractive to one of the many cash-rich industrial mega-caps, particularly in the US.”
Sanjeev Shah, Portfolio Manager, Fidelity Special Situations Fund:
Talk Talk: “Talk Talk’s recent launch of YouView and ongoing cost cutting programme has the potential to surprise the market and beat earnings expectations over time. Additionally, with consumers and businesses increasingly demanding high levels of bandwidth, fixed line telecoms networks are becoming more and more highly prized. The recent M&A activity around Virgin Media shows just how attractive these sorts of assets are.”
Alex Wright, Portfolio Manager, Fidelity UK Smaller Companies Fund and Special Values Investment Trust:
Creston: “Creston is a small company, with a market capitalisation of around £50m. It is extraordinarily cheap, trading on only 4 times next years’ earnings. It has strong positions in attractive niches such as social media and healthcare marketing, and as such could be seen as an attractive acquisition target for larger marketing and media groups.”
