4 battered ASX 200 shares that are 'obvious M&A targets': expert

Which companies could be snapped up over the next 12 months?

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Key points

  • These ASX 200 companies have been identified thanks to their attractive valuations and solid fundamentals
  • The share prices of the companies are also down considerably year to date
  • These shares are spread across the REIT and technology sectors

One investment specialist believes that a handful of ASX 200 shares could be attractive merger or acquisition (M&A) targets.

Tribeca Investment Partners lead portfolio manager Jun Bei Liu gave her analysis of these shares in an article that appeared in Livewire yesterday morning.

Liu said the M&A case for these stocks is strengthened due to their depressed valuations amid the current bear market, while their business fundamentals remain strong. Liu believes another catalyst will be a sector rotation into growth stocks over the coming year. From that, the real estate property trust (REIT) and property trust sectors are "the most obvious M&A targets".

Let's investigate which ASX 200 companies could be snapped up in the next 12 months.

Property shares could be a target

Liu believes that Dexus Property Group (ASX: DXS) and GPT Group (ASX: GPT) could be prime M&A targets. They are potentially undervalued when comparing their share prices to their book values.

Liu said:

The most obvious M&A target is the REIT and the Property Trust sector. The premium property players, such as Dexus or GPT Group, are not going to remain at such low discounts to their net asset values. We also see value in Ramsay – we think it looks incredibly cheap, given its premium asset holding, as well as its expected earnings growth over the next few years.

Both of these property shares are down substantially year to date. Dexus is down 30.7% while GPT Group has lost 25.9%.

ASX 200 tech shares too

Liu is also keen on two ASX tech shares as M&A targets, namely NextDC Ltd (ASX: NXT) and Megaport Ltd (ASX: MP1). Liu leaned more towards NextDC due to its robust fundamentals and "infrastructure-like revenue stream".

Thanks to the sector rotation out of technology stocks that unfolded late last year, the technology sector is one of the worst performers on a year-to-date basis. NextDC is down 29% while Megaport is down over twice as much at a 67% loss.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. 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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