Morningstar Identifies Likely Takeover Candidates across Equity Coverage
Universe; Publishes Merger and Acquisition Insights Report for 2013
CHICAGO, Jan. 29, 2013
CHICAGO, Jan. 29, 2013 /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a
leading provider of independent investment research, today published its
merger and acquisition insights report for 2013, "M&A Market Awaits Clearer
Economic Signals." Morningstar's comprehensive research report includes
investment ideas among its list of potential takeover candidates, merger and
acquisition analysis by sector, credit implications of merger and acquisition
activity, an examination of the role economic moats and stewardship play in
deal-making, and a global outlook for merger and acquisition activity.
"We think 2013 will bring an uptick of deal activity, after we've seen a
decline in the number of deals and very little growth in the total value of
deals in the last two years," said RJ Hottovy, CFA, director of global
consumer equity research for Morningstar and co-editor of the report. "While
we don't see the potential for huge blockbuster deals in the near term,
there's no shortage of companies with available capital on their balance
sheets and high operating margins, fewer organic growth opportunities, and
candidates with attractive valuations."
According to Morningstar, the top 11 investment ideas among potential takeover
candidates in 2013 are:
oBG Group PLC
oChesapeake Energy Corp
oCity National Corp
oNII Holdings Inc.
oSandRidge Energy Inc.
While the global economic recovery has remained sluggish, 14 prospective
takeover targets Morningstar identified in the past two years have accepted
acquisition offers. In 2012, IBM acquired Kenexa at a 42 percent premium,
Sprint settled on a deal to acquire Clearwire—though DISH Network has since
joined the bidding—and Deutsche Telekom subsidiary T-Mobile and MetroPCS
announced a merger. PVH Corp also acquired Warnaco in 2012—a case where
Morningstar had identified both the acquirer and the takeover candidate. Four
of the 14 prospective takeover targets Morningstar identified were also
highlighted as top investment ideas in Morningstar's annual merger and
acquisitions insights report in 2012 or 2011.
In the 2013 research report, Morningstar equity analysts identified a total of
71 takeover targets across eight sectors: basic materials, consumer cyclical
and consumer defensive, energy, financial services, healthcare, industrials,
technology/communication services, and utilities. Potential takeover
candidates for each sector were determined by unique and proprietary scoring
systems for each sector, based on industry-specific drivers of merger and
acquisition activity as well as factors such as free cash flow, management,
and capital structure.
Morningstar then examined its list of potential takeover candidates across all
eight sectors to identify the 11 most compelling stocks for 2013. Morningstar
selected companies that are the most attractively priced based on their
price/fair value ratio and ranking in their respective, sector-specific
potential takeover candidate list. Analysts also identified potential
acquirers in each sector.
The research report also examines which potential acquirers are likely to
create significant shareholder value through merger and acquisition activity,
along with potential red flags of deals that could harm shareholder value.
A synopsis of Morningstar's merger and acquisition insights report for 2013 is
available at www.morningstar.com/goto/MandAReport.To view the executive
summary, please visit http://global.morningstar.com/MandAInsights2013. The
full report is available to institutional investors through Morningstar
Select, the company's institutional equity research portal. For access,
institutional investors may contact email@example.com.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in
North America, Europe, Australia, and Asia. The company offers an extensive
line of products and services for individuals, financial advisors, and
institutions. Morningstar provides data on more than 385,000 investment
offerings, including stocks, mutual funds, and similar vehicles, along with
real-time global market data on more than 8 million equities, indexes,
futures, options, commodities, and precious metals, in addition to foreign
exchange and Treasury markets. Morningstar also offers investment management
services through its registered investment advisor subsidiaries and has
approximately $195 billion in assets under advisement and management as of
Sept. 30, 2012. The company has operations in 27 countries.
©2013 Morningstar, Inc. All rights reserved.
Nadine Youssef, +1 312-696-6601 or firstname.lastname@example.org
SOURCE Morningstar, Inc.
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