What: At 6:19pm on Monday evening, mining and earthmoving service supplier Bradken Limited (ASX: BKN) announced to the ASX that the board had unanimously recommended a cash takeover offer.
Here’s what you need to know: The offer has come from the Tokyo Stock Exchange-listed Hitachi Construction Machinery Co (HCM).
The offer price for 100% of Bradken is $3.25 per share. This represents a 34% premium to the last traded price of $2.43 and a whopping 90% premium to the volume-weighted average price of the past 90 days!
As a global manufacturer and supplier of consumables and capital products to the mining, transport, industrial and contract manufacturing markets, Bradken has not surprisingly been hard hit by the resource sector downturn.
Highlighting the tough operating environment, Bradken’s reported profits have fallen from $100 million in FY 2012 to losses of $241 million and $196 million in FY 2015 and FY 2016 respectively.
Dividends have also been suspended since FY 2014 and gearing has risen.
In turn, the share price has fallen significantly. Having reached a high of nearly $15 in late 2007, the stock headed south to a low of just 37 cents earlier this year before rebounding strongly over the past few months prior to this week’s takeover offer.
Now What: The rally in Bradken’s share price and subsequent takeover offer will be a wakeup call to many value investors who haven’t been actively scouring the resource and mining service sectors for opportunities.
While it is probably too late to profit from Bradken, no doubt there are still opportunities out there amongst two of the ASX’s most battered and bruised sectors.
Although not without their risks, three companies which could be worthy of value investors’ attention are Bradken’s peers, Cardno Limited (ASX: CDD), Monadelphous Group Limited (ASX: MND) and UGL Limited (ASX: UGL) whose share prices all continue to trade at depressed levels.
Mining shares have helped drive a double-digit rally for the ASX from 2016 lows. Investors should be on high alert. You’ll find a full rundown below of 3 shares we think you should avoid today plus one top pick worth buying, even if the market turns south and the RBA keeps rates at an “emergency low.” Simply click here to uncover these stocks.
Motley Fool contributor Tim McArthur has no position in any stocks mentioned. 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.