The S&P/ASX 200 Index (ASX: XJO) as a whole hasn't fallen much in 2022. However, there are certain businesses that have dropped significantly. But, could the fact there seem to be a lot of takeover bids right now suggest that investors are missing an opportunity with ASX 200 shares?
At the moment, the ASX 200 is down around 6% for the year. At one point it was down by approximately 15%, though it has recovered from the year low in June 2022.
But within the ASX 200, there has been some serious pain. The Xero Limited (ASX: XRO) share price is down 52%, the Domino's Pizza Enterprises Ltd (ASX: DMP) share price has dropped 50% and the Boral Limited (ASX: BLD) share price has declined 53%.
High level of bidding
There have been a number of bids for ASX 200 shares in recent times.
Energy business Origin Energy Ltd (ASX: ORG) has received a takeover bid of $9 per share from Brookfield and its affiliates. This comes after the Brookfield bid for AGL Energy Limited (ASX: AGL).
Perpetual Limited (ASX: PPT), one of the ASX's largest fund managers, launched a takeover bid for another fund manager called Pendal Group Ltd (ASX: PDL). However, the Perpetual share price drifted lower and Regal Partners Ltd (ASX: RPL) (with a consortium) has launched a bid to try to buy Perpetual. The latest Regal bid was $33 per share.
Don't forget also that Australia and New Zealand Banking Group Ltd (ASX: ANZ) is trying to buy the banking division of Suncorp Group Ltd (ASX: SUN).
Are ASX 200 shares opportunities?
According to reporting by The Australian, the broker UBS has suggested that recent highly-priced takeover bids by private equity suggest that ASX shares "offer value" and that parts of the market are "cheap".
UBS pointed out that the bid for Origin was a 54.9% premium compared to the closing price on 9 November 2022 of $5.91.
Richard Schellback asked the question "How can one community of investors price the same company so differently to another?"
He answered:
Time horizon and funding may offer some explanation, but it also suggests that segments of the equity market are cheap.
Right now, the S&P/ASX 200 trades at a one-year forward price/earnings (P/E) ratio of 13.6 times, which represents an 8% discount to the 14.7 times it has averaged since 2000.
Stocks from the de-rated funds management and retailing sectors stand out as 'most attractive' on this quantitative LBO screen.
It was reported that ASX (200) shares that stand out on the leveraged buyout screen have "strong free cash flow yields and low gearing."
Foolish takeaway
While investors can't know what the next takeover offer is going to be, it might be reassuring to see whether a business has fallen too hard, then a buyer could swoop in on the perceived bargain (and boost the share price).
