By
Bhushan Akolkar
April 12th, 2024
Goldman Sachs has presented a list of 15 European stocks of the companies with a potential for merger and acquisition based on current business outlook.
The global stock market yields to the opinion and calls of market analysts and top investment firms. The behavioral pattern of investors is highly influenced by calls from top investment firms like JPMorgan Chase & Co (NYSE: JMP), Citigroup Inc (NYSE: C), and Goldman Sachs Group Inc (NYSE: GS) to mention a few. These market influencers are tasked with the holistic review of businesses, with the aim of keeping world economies afloat through the activities of the stock exchange market. Goldman Sachs on Monday added 15 stocks as part of its semi-annual assessment of its European Merger & Acquisition basket. The stocks encompass technology companies, utilities, and insurance companies.
Foundation for M&A Analysis of Stocks by Goldman Sachs
The Goldman Sachs stock approval was given to stocks that had at least a 15% chance of acquisition based on their Merger and Acquisition framework. Those allocated an over 30% probability are ranked 1, and those over 15% ranked 2, providing they meet the necessary liquidity requirements.
As reported by Reuters, the blockbuster deal from Amazon and Whole Foods, and high-profile takeover attempts from Akzo Nobel and PPG, and most significantly Unilever and Kraft, have thrust European M&A activity into the spotlight this year. Goldman Sachs analysts noted that:
“After a fairly subdued 2016, European M&A volumes have been strong so far in 2017, with deal activity supported by fairly robust macro data and a reduction in policy uncertainty, along with low market volatility and still-low financing costs.”
The components of Goldman’s M&A basket have an average market cap of 6.9 billion euros ($7.7 billion), versus 19.6 billion euros for the average stock covered by the bank’s European equity analysts.
Categorization by Sectors
Avast Plc (LON: AVST), Hiscox Ltd (LON: HSX), and Quilter Plc (LON: QLT) were among the notable tech companies featured in the new addition. Avast, which was admitted to Britain’s FTSE 100 index for the first time on Monday, was added with a ranking of 2 by Goldman analyst Gautam Pillai, who said the Czech internet security company stands to benefit from “increasing ‘work from home’ trends in a heightened cyber risk environment.
With the failed attempt by Kraft to acquire Unilever, the latter company was assigned a ranking of 2 from three showing a medium probability (15 to 30%) of being involved in M&A activity.
Energy supplier SSE was also upgraded from 3 to 1, with Goldman analyst Ajay Patel citing it as a possible target owing to a “favorable combination of high earnings’ exposure to low-risk infrastructure activities, and its relatively small market cap.
Other companies featured in the list include Italian banks BMPS, and Banco BPM, British Defense Contractor Babcock, Spain’s EDP Renewables, Remy Cointreau, FeverTree, Uniper, Pennon, United Utilities, Severn Trent.