Zayo – Back In M&A Play

Zayo: Two or three rounds of bid speculation have surrounded US communications infrastructure group in the recent past. A low ball offer just above $30 has been understandably rejected by the company – especially so given the way the average analyst target at $35 and most accompanied by strong buy recommendations. In addition, activist shareholder Sachem Head Capital would not be willing to sell out cheaply.

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The bidders are however regrouping, even though private equity likes and needs to buy cheap, in this situation, with Google / Alphabet  a potential bidder this is not likely to be possible. Blackrock – said to be in the fray, will have to dig deeper into its pockets. But at least it has the funding lined up and is revising its offer to around $35. Google would likely pay more if it had to.

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The suggestion is therefore that the aforementioned $35 is likely to be the new offer for Zayo to contend with. In a competitive bid situation up to $40 could materialise, especially given the way that the company’s recent trading has been so solid.

Barring an overnight / sudden announcement (as soon as this weekend), a break of $28 – recent chart resistance would imply that this situation is once again strongly in play.

 

 

Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.

Competitors Steering Towards Nokian Tyres

Nokian Tyres, a specialist in winter season tyres, is said to be in focus currently as a potential takeover target in the market.

It is number one in the world in terms of its niche business area. The parties rumoured to be interested are Pirelli, Bridgestone and Goodyear – a predictable assortment of its larger competitors. Clearly, this makes for an obvious bolt on to the larger rivals, with added synergies / efficiencies.

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The current share price of Nokian is near to €30, with a takeout price as high as €40 likely to clinch any deal that may materialise.

A recent trading update from Nokian Tyres was solid, as was the latest from Michelin. It could very well be the case that with increasingly extreme weather patterns, demand for the offering of Nokian is set to increase. Given that Pirelli was taken over by the Chinese a couple of years ago, this may provide the clue to potential M&A moves in this space.

Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.

HB Fuller Likely To Be Involved In An Adhesives M&A Land Grab

HB Fuller (FUL)  is a $2.5bn American adhesives group being looked at by a number of parties. The company is a prime, quality player in its space, and with annual revenues up to $3bn, ROE is 15%  and growing. Therefore it makes sense for competitors to try and consolidate their position in the adhesives space by taking it over.

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In Europe we have a company called Arkema who are eyeing up HB Fuller. But there is also 3M in the US, and in Germany,  Covestro AG. The main company looking at HB Fuller is Arkema, but clearly 3M has the financial firepower as it is a much larger company. This implies the premium on the current share price could be significant, especially if a bidding battle is triggered. The take out price would likely have to be at least $65.

 

BT / Deutsche Telekom

It is good to see the way that the financial press have cottoned onto the BT / Deutsche Telekom story after it appeared here a couple of weeks back.

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This focuses on the way that the German giant is now free to make a takeover bid for its ailing British counterpart, hit by scandal and incompetance in the recent past.

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The end of the lock up to start this year means that if DT is in the mood to go for BT at a relatively low price, years of underperformance may finally be over. The technical level to break may only be above the December gap through 241.75p. Indeed, it may be worth waiting for this potential trigger point given how much badwill BT shares have attached to them in the market.

Henkel Update – Japanese Interest

After recent coverage here regarding Henkel, there has apparently been some movement. In particular, Henkel’s adhesive business is in focus, with possible interest from ThreeBond  of Japan, and American industry players. As reported before, Unilever looks to be the main contender in the frame should any M&A for the whole of Henkel materialise.

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The shares remain bombed out, and it is therefore common sense that rivals in the sector would be sniffing around. This is especially the case as the company’s own initiatives to extract shareholder value have so far received a mooted response. A takeout price towards €120 looks to be on the cards, any deals that focus on individual parts of the group notwithstanding.

Henkel in the sights of Unilever / private equity

€84 the current share price on Henkel PFD (preference shares). It has been over €115 over the past year– still paying a good dividend. €35bn market cap.

Unilever is looking at the Persil, Right Guard, Pritt owning group, as well as private equity. Henkel is in focus as it has a number of divisions, and with the bombed out share price and multiple brands, it could subsequently be cherry picked by its new owners. Given where the shares are now an offer around €120 a share would be difficult to resist.

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The 143 year old business clearly needs a revamp, despite being one of the oldest German names in consumer products. This would almost certain include focusing the company on a core business, rather than the current all things to all people offering. Indeed, it is the type of opportunity that the late Sir James Goldsmith would probably have liked the look of in terms of a bid to break up the company in asset stripping fashion.

Given the dearth of M&A in the markets due to political and regulatory overkill, this could be just the type of deal to get the City of London moving again. It would also be a good way of Unilever proving that saying no to Kraft Heinz was not a foolish mistake – which it was.

The only issue here is whether private equity would steal its thunder and make a move  on Henkel first, before selling the parts back to the likes of Unilever or Reckitt Benckiser?