One of the worst kept secrets on the local share market is the potential for online classifieds giant Carsales.com Ltd (ASX: CAR) to launch a takeover bid for its Asia-focused junior doppelganger iCar Asia Ltd (ASX: ICQ).

iCar Asia operates automotive classifieds websites in the South East Asian countries of Malaysia, Indonesia and Thailand, where car ownership remains on a strong upward trajectory as the fast-rising Asian middle-class continues to buy cars in greater numbers.

However, as with property, Asians generally prefers to buy these assets brand new and old cars will be passed down through families or friends rather than traded with strangers on a second-hand basis.

Indeed, trading second-hand vehicles remains somewhat anathema to the Asian psyche and is one reason why I suspect iCar Asia has struggled to gain the growth in cash collections that some anticipated.

For the quarter ending March 31 2016 the company reported cash collections up 46% over the prior corresponding quarter, but they still only totaled $2.07 million. It does have cash on hand of around $16 million and trimmed cash outflows for a fourth consecutive quarter to $1.99 million.

Operating metrics are travelling in the right direction, but not much faster than a Bangkok traffic jam and in my opinion today’s market value around $214 million is largely due to investor expectations that Carsales will launch a full takeover offer in the near future.

The two companies interests are clearly aligned and in August 2015 Carsales topped up its holding at 65 cents a share, as part of a capital raising conducted by iCar Asia in a quest to see it through to profitability.

On May 3 2016 the two companies also agreed to extend their ‘Strategic Relationship Agreement’ for a further three years, with, inter alia, Carsales having the right to top-up its 20.2% shareholding until 29 April 2019.

Since August 2015 shares have raced ahead to 86 cents despite the modest operating performance and investors would be wise to remember that Carsales would only launch a takeover offer if the price is right given the operating performance of iCar Asia.

Recently property website operator REA Group Limited (ASX: REA) launched a successful takeover offer for the Asia-focused website operator iProperty Group in a deal valued around $750 million.

By way of comparison, iProperty was bringing in annual revenues of $32.3 million and was cash flow positive at the time of a deal that commanded a price premium due to the potent nature of property as an asset class.

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Motley Fool contributor Tom Richardson owns shares of REA Group Limited.

You can find Tom on Twitter @tommyr345

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 Bruce Jackson.