Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Six potential takeover targets as M&A heats up

AJ Bell is an easy to use, award-winning platform Open an account
We've accounts to suit every investing need, and free guides and special offers to help you get the most from them.
You can get a few handy suggestions, or even get our experts to do the hard work for you – by picking one of our simple investment ideas.
All the resources you need to choose your shares, from market data to the latest investment news and analysis.
Funds offer an easier way to build your portfolio – we’ve got everything you need to choose the right one.
Starting to save for a pension, approaching retirement, or after an explainer on pension jargon? We can help.
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
UK firms have been subject to around £28 billion of mergers and acquisitions deals so far in 2021, the highest level since 2009 according to data from Dealogic. Investors are now trying to work out which UK stocks could be next.
Temporary power supplier Aggreko (AGK) surged 38% on 5 February after a consortium of private equity groups TDR Capital and I Squared Capital made a possible all-cash offer of 880p per share.
TDR was also behind a 305p per share proposal for specialist distressed debt manager Arrow Global (ARW), pushing the shares up 26% (8 Feb).
Increasing interest from private equity buyers shouldn’t be a surprise as collectively they have around $1.5 trillion of cash to invest, according to data provider Preqin.
In addition, UK shares have lagged other developed markets due to Brexit limbo over the last year, making them cheaper in relative terms. Asset manager Schroders says UK stocks have rarely been cheaper based on a price to sales multiple.
The pandemic has created a polarised market with the leisure, hospitality and travel sectors becoming casualties while the computer games and gambling sectors have seen a significant boost. Private equity and trade buyers are looking at both losers and winners of the pandemic as they seek to take advantage of strong trading or expect a bounce from the UK economy reopening.
Investors looking for potential targets might want to focus on companies with good asset backing and reliable cash flows, as well as undemanding valuations. Shares ran a screen on the market for such stocks and interestingly Aggreko made the original list.
Of the names on the list excluding Aggreko, UK food retailer J Sainsbury (SBRY) has good asset backing and reliable revenues. The company has been reducing its debts, leaving scope for a buyer to increase leverage should a takeover happen.
Home improvement retailer Kingfisher (KGF) has benefited from the pandemic as people spend more cash on their home which is likely to remain a key driver of growth. Foreign private equity buyers could view Kingfisher as a strategic entry into the UK.
Tool hire firm Speedy Hire (SDY) is also on the list and has been increasing market share.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
The value of your investments can go down as well as up and you may get back less than you originally invested. We don't offer advice, so it's important you understand the risks, if you're unsure please consult a suitably qualified financial adviser. Tax treatment depends on your individual circumstances and rules may change. Past performance is not a guide to future performance and some investments need to be held for the long term.
Our website uses cookies to give you a better browsing experience.
You can choose to accept all cookies, or control which we use by clicking 'Manage cookies'. To learn more, read our cookie policy.