Who In Europe Is Likely to Be the Next LBO Target?

by: SA Eli Hoffmann

Excerpt from Barron's Weekly Magazine. Receive all our excerpts by signing up here:

For Europe, Another Big Buyout Year Ahead by Vito J. Racanelli

Summary: European mergers and acquisitions should continue at a brisk pace in 2007, fueled by low interest rates, strong internal numbers, and huge amounts of excess cash looking for a home. Investors and analysts agree M&A will grow bigger and riskier, possibly a sign that the current bull market is in its final stages. The U.S., analysts say, has already been thoroughly picked over by LBO funds; Europe and other non-U.S. assets hold more value. Stocks that have underperformed for a few years, such as Hellenic Telecommunication Organization S.A. (OTE), are vulnerable. Other U.S.-traded Euro stocks that have the traits typically favored by LBO buyers -- stable cash flow, low debt, and cheap valuations -- include Barclays PLC (NYSE:BCS) [rumors have it being bought out by Bank of America Corp. (NYSE:BAC)], Deutsche Telekom AG (DT), Deutsche Bank AG (NYSE:DB), ABN Amro Holding N.V. (ABN), Koninklijke KPN N.V. ADR (KPN), and Swisscom AG (NYSE:SCM).
Related Links: Private Equity and Leveraged Buyouts: With Risk Comes Reward, The Crisis in Global Capital, Bond Bull Funding of LBOs -- No End in Sight, LBOs Making Executives Very, Very Rich