Merger and acquisition activity is picking up in Australia with more than $5 billion in deals already announced in the past few months alone.
Among the deals, South Africa’s Woolworths made a #2.15 billion offer for department store retailer David Jones Limited (ASX: DJS), Singapore’s Wilmar International and First Pacific have raised their bid to $1.4 billion for bread maker Goodman Fielder Ltd (ASX: GFF), while Stockland has made a $2 billion bid for fellow property group Australand. There are also a host of smaller deals taking place in the gold sector.
More mergers and takeovers could be on the way as companies take advantage of cheap debt, solid balance sheets and even cheaper assets up for sale. And one of the best way analysts suggest to play this theme is to buy those companies that facilitate those deals including Macquarie Group (ASX: MQG) and Computershare Limited (ASX: CPU).
Investment bank Macquarie Group earns fees from advising on mergers and acquisitions, while Computershare facilitates the processing of things like share purchases and acceptance forms. Here’s another two reasons why these two companies could be set for impressive gains this year.
Both companies will also benefit from the US economic recovery, with the vast majority of Computershare’s earnings coming from that country. Macquarie benefits from rising global share markets and higher levels of activity, including as one of the lead managers of the float of mortgage insurance provider, Genworth Australia.
Falling Aussie dollar
Computershare will also benefit from any further falls in the Australian dollar, with around 80% of its earnings in US dollars, while Macquarie generates around half its revenues offshore.
Both companies deserve a spot on your watchlist, but if you already own them and want one of our best ideas, here’s a small cap stock paying generous fully franked dividends and is still flying under the radar.