Morningstar and Footnoted.org Name 19 Possible Takeover Targets

This afternoon, Morningstar and its affiliate website Footnoted.org both released a list of their top 10 potential takeover candidates for 2011. Out of the nineteen stocks mentioned, Leap Wireless (Nasdaq: LEAP) sticks out as a company named on both lists.

"We believe merger & acquisition activity will come in all shapes and sizes this year, Morningstar analysts Bridget Freas, R. J. Hottovy, and David Sekera said.

"Leveraged buyouts likely will remain a persistent theme, as private equity and other buyout firms look to put dry powder to use before capital commitments expire. We also expect acquisitions to have a global feel in 2011, as domestic firms look to both established and emerging markets for takeover candidates to enhance anemic domestic returns during the last few years. With further stabilization in the credit markets, we also expect a handful of blockbuster strategic acquisitions this year, many of which could change the landscape of their respective industries."

Included on the Morningstar list (in Alphabetical Order) was:

• Actelion (Nasdaq: ATLN): "We think the market undervalues Actelion's broad pipeline outside of PAH, which will play a much larger role in the company's sales when Tracleer patents begin to expire in 2015."
  
  
• American Eagle (NYSE: AEO): "American Eagle fits a typical leveraged buyout candidate profile, given a debt-free balance sheet and strong cash flow characteristics."
  
  
• Clearwire Corporation (Nasdaq: CLWR): "its next-generation network has significantly more capacity than its rivals and its business should grow rapidly due to consumers' growing appetite for data services."
  
  
• Cloud Peak Energy (NYSE: CLD): "We think the market under estimates the margin expansion potential for Cloud Peak as rising marginal production support coal prices."
  
  
• Constellation Energy (NYSE: CEG): "Low-cost, top-tier operations and recent market share gains have given ConstellationEnergy meaningful cost advantages that we think are sustainable."
  
  
• Leap Wireless (Nasdaq: LEAP) "...we see more value in its assets (subscribers, spectrum, and infrastructure) which we think would be worth more if acquired by a larger carrier."
  
  
• Myriad Genetics (Nasdaq: MYGN): "The growing emphasis on molecular diagnostics represents significant growth potential for Myriad and we expect the company to benefit from the emerging trend of pairing diagnostic tests with cancer treatment."
  
  
• Petrohawk Energy (NYSE: HK): "Though challenged by low gas prices, Petrohawk's prospects to successfully execute on its build-to-sell strategy remain bright for the longer term.
  
  
• Range Resources (NYSE: RRC): "With low-cost, multiyear leases on the best acreage in the Marcellus, we're bullish on Range's long-term prospects"
  
  
• SunTrust Banks (NYSE: STI): "SunTrust faces several near-term revenue challenges but cost-cutting efforts and an excellent footprint should propel the company as it moves out of the credit crisis."

You can read the full Morningstar report here.

Morningstar's Footnoted.org subsidiary also listed a Top 10 takeover candidates list, based on its analysis of SEC filings.

Footnoted.org's list includes:

• Abiomed Inc. (Nasdaq: ABMD): "...If the big dogs are circling, Chief Executive Officer Michael R. Minogue is ready: The board this summer granted him 105,000 stock options with an exercise price of $10.03, along with 53,000 shares of restricted stock that will vest over the next three years (contingent on certain fiscal 2011 performance measures)."
  
  
• Copano Energy LLC (Nasdaq: CPNO) "... the company increased the amount of severance executives would receive if the company is sold."
  
  
• Infinera Corp. (Nasdaq: INFN) ...we've certainly seen enough situations where the departure of a founder has made it easier to find a buyer.
  
  
• Lawson Software, Inc. (Nasdaq: LWSN)."Since last May, Carl Icahn has been accumulating shares...Even as Icahn has been building his stake, Lawson's board seems to be paying close attention to the company's stock plans."
  
  
• *Leap Wireless International Inc. (Nasdaq: LEAP) (Overlaps with Morningstar list): "... we see suggestions in Leap's filings that it remains very much in play."
  
  
• LKQ Corp. (Nasdaq: LKQX): "... we spotted some curious changes in the filings — not least, the easing out of long-time CEO Joseph Holsten over the next year, plus some chunky stock-option grants and other details."
  
  
• Pride International Inc. (NYSE: PDE): "An oft-mentioned suitor is Seadrill Limited (SDRL)...But we're more interested in some other recent filings by Pride. For example, the company amended its Long-Term Incentive Plan so that directors, like the executive officers, benefit if a change in control occurs."
  
  
• Select Medical Holdings Corporation (NYSE: SEM) "...they seem to have been paying unusually close attention to what happens if a buyer comes along."
  
  
• Stage Stores Inc. (NYSE: SSI): "Stage increased the size of its board by one, adding a seat for Gabrielle E. Greene — a general partner of private equity shop Rustic Canyon/Fontis Partners."
  
  
• Smurfit-Stone Container Corp. (NYSE: SSCC): "Given the short-term of the consulting agreement and the specific conditions which benefit Klinger if a change in control occurs by the end of September, we think it's possible that negotiations for a sale are occurring."

You can read the full Footnoted.org report here

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In