Takeovers will continue to rock ASX shares

ASX shares were rocked by 2 major takeover bids within 4 days last week. Here’s a closer look at takeover activity on the ASX.
The post Takeovers will continue to rock ASX shares appeared first on Motley Fool Australia. –

Up to the end of September, merger and acquisition (M&A) activity for ASX shares was at its lowest point for 17 years. Specifically, announced M&A transaction volumes for 2020 have been almost half the US$88 billion tally seen by 30 September last year, according to data published by Refinitiv. 

For example, in February a takeover of National Storage REIT (ASX: NSR) for $1.9 billion was called off. Just as the $8.8 billion bid for Ampol Ltd (ASX: ALD), then Caltex, was shelved in April due to coronavirus.

Nonetheless, as predicted by the Refinitiv data, the fourth quarter has already seen a definite spike in takeover activity. In fact, there were 2 major bids for large cap ASX shares within 4 days of each other. 

Large Cap ASX Shares

Manufacturing and beverages

Last Monday, Coca-Cola Amatil Ltd (ASX: CCL) acknowledged takeover talks with Coca-Cola European Partners PLC (NYSE: CCEP). However, at least 3 major shareholders have expressed discontent with the offer, even though the board have unanimously supported it. Head of equities at Pendal Group Ltd (ASX: PDL), Crispin Murray has commented:

We don’t feel like this is an offer that is compelling and we don’t see a lot of downside if the deal fell over…It’s a good time to bid when borders are shut and there are no tourists and earnings have been downgraded. The stock could have been trading around mid-$11 – now you’re only looking at a 10% premium on this bid.

His views were reflected by other major shareholders such as investment managers Martin Currie Australia, and Antares Capital. Specifically, they believe the bid is opportunistic, because the ASX share price has fallen due to coronavirus. In addition, various analysts have been critical, citing the offer as a “fair, not full” valuation of the ASX share. Regardless, most agree it will likely get away in the new year. 

Financial Services

Last week AMP Limited (ASX: AMP) announced ongoing talks with US private equity firm, Ares Management Corp Class A (NYSE: ARES). This is supposedly a $6.4 billion non-binding bid at this stage.

However, according to the Australian Financial Review (AFR) several large shareholders have questioned the logic behind the deal, believing a break up of the business is a better option. Simon Mawhinney, chief investment officer of shareholder Allan Gray didn’t believe Ares Management wanted to own a bank, while Hamish Carlisle of Merlon Capital Partners, believes it would be a better option to break up the wealth manager. Meanwhile, the market is waiting to see if any other interested parties will declare their hand.

Future takeovers for ASX shares

Aside from moves by large foreign interests in the large cap arena, there is also something going on with investment funds. In particular, WAM Capital Limited (ASX: WAM) is executing 2 hostile takeovers of smaller funds.

However, of more immediate interest is another potential multi-billion dollar takeover in the S&P/ASX 200 Index (ASX: XJO). Back in September the AFR posted an article implying that the takeover of Ampol Ltd (ASX: ALD) may start again soon. Alimentation Couche-Tard Inc Class chief executive Brian Hannasch emphasised to investors in early September the “significant runway” it saw for M&A, with a focus on US and Asia. Moreover, the Canadian company has since poached Louise Warner, Ampol’s former executive general manager for fuels and infrastructure.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Takeovers will continue to rock ASX shares appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!