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Is this the next ASX 200 company to unveil a M&A deal?

The Qube Holdings Ltd (ASX: QUB) share price and Chalmers Limited (ASX: CHR) share price will be in the spotlight this morning on reports that Qube is planning on mounting a bid for the small cap trucking company.

If the report is on the money, the acquisition would be Qube’s second merger and acquisition (M&A) foray this calendar year with the port and logistics group taking over mining and industrial services company LCR Group in a $135 million deal.

The speculation is that Qube is running the ruler over Lindsay Fox-backed Chalmers and plans to put an offer on the table, according to the Australian Financial Review which didn’t reveal the source of the information.

Details of the potential M&A

The acquisition should be fairly easy for Qube to swallow as Chalmers has a market cap of around $35 million and Qube reported a cash balance of $107 million at the end of 2018.

It’s acquisition of LCR was funding through existing debt facilities and that means it should still have enough cash in the kitty to pay an appropriate premium for Chalmers (assuming it’s an all cash bid). The speculation is that Qube is willing to cough up a 40% plus premium to control Chalmers.

The deals show that Qube is looking to spread its eggs out and diversify from its key Moorebank intermodal hub in Sydney – which is a key strategic asset for the group given its location at the supply chain crossroads between port, rail and road.

Chalmers is located in a purpose-built facility in the Brisbane port precinct and had moved there after a long history of operating in Melbourne.

Getting the backing of high-profile trucking magnate Lindsay Fox would be key to the success of the deal given that he has a 17% stake in the target.

Others hit with the M&A fever

Qube isn’t the only S&P/ASX 200 (Index:^AXJO) (ASX:XJO) stock that’s been bitten by the M&A bug. There’s also talk that Boral Limited (ASX: BLD) will make a play for Knauf’s Asian operations, Slater & Gordon Limited (ASX: SGH) and Shine Corporate Ltd (ASX: SHJ) are contemplating a marriage of equals, while Wesfarmers Ltd (ASX: WES) is actively looking for acquisitions post the Coles Group Ltd (ASX: COL) demerger.

There’s plenty of things to watch for in the new financial year and the experts at the Motley Fool believe there’s another group of ASX stocks that can get investors’ pulse racing (in a good way, of course).

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Motley Fool contributor Brendon Lau owns shares of Boral Limited. Connect with him on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. 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 Scott Phillips.

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