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ITV tops list of likely takeovers

Published: 12:33 09 Jul 2014 BST

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Big pharma takeovers may be in the headlines but UK takeover activity has been surpisingly muted overall according to research by Liberum.

Around the globe the situation is different, adds the broker. M&A activity hit a post crunch high of US$945bn in the three months to June buoyed by rising business confidence, low interest and sluggish organic growth. 

However, activity in UK indices has remained stubbornly subdued – just 1% of the FTSE 250 market cap was taken out in 2013 compared a mid cycle average of 4%, said Liberum. 

A change may be on the way soon, however, with 85% of UK fund managers expecting a material pick-up in the number of small and mid-cap (SMID) companies taken over in the next 12 months.

To assist investors spot the likely targets, Liberum’s analysts have put together a list of who they see as the most vulnerable mid-caps and small cos.

Top of the list is terrestrial TV broadcaster ITV (LON:ITV), where its position as one of the top five UK and US content providers makes it an ideal potential add-on according to the broker.

Other likely UK-listed large caps include AstraZeneca (LON:AZN), where Liberum sees an underlying value of £58 per share not including any further bid moves from Pfizer and platinum specialist Johnson Matthey (LON:JMAT) where the appeal is its tax advantages and a peerless global position.

Smaller fry in the firing line include online fashion firm ASOS (LON:ASC) where otherwise and on fundamentals the broker is a seller.

A raft of builders and contractors make the list from Balfour Beatty (LON;BBY), Bovis (LON:BVS), Costain (LON:CSTN) to consultant Hyder (LON:HYDR).

In retail, Mothercare (LON:MTC) has already received an offer, while technology possibilities include bluetooth and wireless group CSR (LON:CSR), instrumentation maker Spectris (LON:SXS) and clean water specialist Halosource (LON:HALO).

Fund manager Jupiter, oil palm grower Narborough Plantations, exhibitions group Tarsus and media group UBM may also appeal to a potential predator said the broker.

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