Bradken Limited
BKN Details
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Hitachi Construction’s takeover bid drove the stock higher:Bradken Limited (ASX: BKN) stock surged over 31.68% on October 04, 2016 driven by the Hitachi Construction Machinery Co. (HCM) cash takeover offer for 100% of stake in the group. This implies an enterprise value of $976.1 million and a fully diluted market capitalization of $688.5 million. Bradken management is very happy with the deal and recommended investors to accept the offer while the decision is subjective to the independent expert opinion. On the other hand, the shares of BKN already surged over 388.9% during this year to date (as of October 03, 2016) and are trading at 52-week high price.
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Recommendation: We give an “Expensive” recommendation on the stock at the current price of $3.20
Henderson Group PLC
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HGG Details
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Merger proposal with Janus Capital Group: Henderson Group PLC (ASX: HGG) stock surged over 11.55% on October 04, 2016 while the group updated the number of securities traded on ASX. HGG has also proposed a merger with Janus Capital Group. The combined entity’s AUM would be >US $320 billion while the overall market capitalization would be over US $6 billion, forming a major asset manager. The overall entity’s geographic penetration would also increase, given HGG’s solid presence in UK and European markets while Janus Capital has strong US markets presence. The merged entity would form >US $2.2 billion while underlying EBITDA is expected to be over US $700 million. Accordingly, both the groups are estimating annual run rate net cost synergies of at least US $110 million weighted to the first 12 months after the merger completion while totally realize three years after completion, forming over 16% of the overall group’s underlying EBITDA. On the other hand, the rise can be used as a profit booking opportunity, as the group’s UK markets could continue to pose pressure despite the merger, due to challenging macro-economics.
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Recommendation: We rate the stock as “Expensive” at the current price of $4.44
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Investment Capabilities (Source: Company Reports)
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