As I wrote in the first article, a number of companies have been identified by a leading fund manager as potential takeover targets by cashed-up private equity firms. Looking for business facing short-term issues, but bright long-term prospects, private equity companies could also have their eyes on these additional four companies.
The four are also candidates to revive their businesses and prove the market that their current shares are undervalued, based on their future potential.
Here’s the four potential targeted companies…
UGL Limited (ASX: UGL), a diversified services company which was looking to spin off its DTZ Property business. UGL now appears to reconsidering its demerger plan, mainly thanks to the poor performance of its engineering division, and $640 million in net debt. Private equity may well be attracted by the potential to drive further cost cuts and sell off the DTZ Property business.
Qantas Airways Limited (ASX: QAN) could be a takeover target, with potential acquirers eyeing off a sale of the valuable frequent flyer business (the airline’s most profitable division). Other options could include splitting the airline into international and domestic divisions and selling off the Jetstar subsidiary.
Cabcharge Limited (ASX: CAB) is facing regulatory issues, with many states considering cutting the maximum fee the company can charge for processing taxi payments. It also faces disruption to its core business from newcomers such as inGoGo, Uber and GoCatch, which provide taxi apps and charge lower fees than Cabcharge. But investors may have written off the company’s other businesses, which bring in plenty of revenue.
Pacific Brands Limited (ASX: PBG) – the maker of Bonds undies and owner of several other well-known Australian iconic brands, is struggling with increased competition, private label brands and retailers demanding lower prices. Private equity may view Pacific Brands as a potential ‘Marks and Spencer’ – with an estimated 25% of Britons wearing M&S branded underwear. Could Pacific Brands attract the same sort of attention as surfwear maker Billabong International Limited (ASX: BBG) – which saw six different bids for the company?