Broker Wilsons says capital markets remain ripe for an increase in mergers and acquisitions (M&A) activity thanks to large pools of capital, structural changes from COVID-19, cheap borrowing costs and pent-up demand for transactions.
The broker applied quantitative and qualitative filters on S&P/ASX 100 companies to name the ones he thinks are most likely M&A candidate.
Some of the companies that have passed all of its valuation, share price performance and earnings performance criteria are Ansell, Downer, Amcor, Atlas Arteria and Scentre Group.
He said Ansell’s shares had significantly underperformed the market and its global business model could make it a target for large conglomerates or private equity. Amcor is considered a potential takeover target for similar reasons.
Elsewhere, the broker named South32, Star Entertainment, Mineral Resources, Ampol, Reliance Worldwide and Sonic Healthcare as meeting two of its three screens.
He said Mineral Resources has strategic lithium and iron ore assets, as well as an open share register, with entrepreneurial founder Chris Ellison at 12%.
South32 is described as very cash-generating, with 50% of the portfolio facing ESG issues that would be less of a problem if the miner were taken private.
Other companies named by Wilsons as takeover candidates include Challenger, a2 Milk, Tabcorp and Worley.