Companies likely to be take-over or privatised

Given the gloom and doom in the current Singapore market, the most likely catalyst for any company\'s share price to jump is that of M&A or privatisation. During the past few months, we have seen quite a few of these cases. Pokka being taken private by its parent company, SCS being taken over by Singtel, BRC Asia GO by HG Metal, SNP\'s M&A etc. Like to start a thread to discuss which companies are most likely to be M&A targets or privatisation candidates.

[Dow Jones] Coca-Cola\'\'s (KO) recent proposed US$2.4 billion acquisition of China Huiyuan Juice Group (1886.HK) hints of imminent consolidation in China\'\'s food & beverage sector, with Singapore-listed Hsu Fu Chi (AS5.SG), Synear Food (Z75.SG), Celestial Nutrifoods (C56.SG), China Lifestyle F&B (E69.SG) possible takeover targets, says Citigroup. Notes all 4 companies boast strong market share, wide distribution reach (more than 10,000 retail points) in China; \"we identify strong brand equity, prominent market share and well-established distribution network as key characteristics that will attract potential acquirers, who look to create synergistic value in China.\" Hsu Fu Chi off 1.0% at S$1.02, Synear flat at S$0.385, Celestial flat at S$0.64, China Lifestyle +8.3% at S$0.26.

My first choice is Portek. The write-down by the Company during the past few results announcement shows that the business are undergoing due diligence and the acquirer probably wants the bad debts, doubtful receivables to be settled prior to the take-over. The Company itself has also admitted that it is in the mist of discussions with interested parties. Maybe we will see an announcement pretty soon.

Addvalue Technologies is the second choice. Company has cash, but weak business model. They are practically burning cash every day. They tried to sell themselves off last year to a European party but was foiled when that party was taken over instead. Recently, they announced that they are talking to Middle East people for them to take a strategic stake in the Company. And yesterday, the Company called for a TRADING HALT. Will not be surprised if they announced the take-over details soon.

Cheap & good buys is one half of the equation. The other half : which potential buyers are cash- rich? isn\'t it difficult to raise financing in these times ?

Actually, there are still a lot of cash-rich funds around. Some of them have cashed out at the start of the year. I know of at least 3 PE that are sitting on more than USD 300 million cash and they are not hurrying into the market. Was lunching with one of them last week and he remarked to me that if Warren Buffett can collect 10% on his GE preference shares, then he should definately be looking at ROI of more than 20% if he finances a deal.