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Finerman: 4 Retailers Attractive M&A Targets?

Tuesday, 12 Oct 2010 | 6:31 PM ET

With the market explodiong in M&A, Karen Finerman thought it was a good time to look for other attractive take-out targets.

Specifically, she keyed into Bain’s bid to takeover Gymboree for $1.8 billion, a 23.5% premium.

Not only did Finerman only consider retailers while conducting her research, but she used criteria that mandated she only consider companies that have similar characteristics to Gymboree.

“In other words companies with great cash flow, great balance sheets and companies that could get a takeover price that significantly higher than where the stock is currently trading,” she explains.

And after crunching the numbers she came up with 4 potential candidates. They follow:

Takeover Targets
A look at some retail takeover candidates.

Aeropostale
Children’s Place
DSW
American Eagle

"I think Children’s Place is probably the ripest and could be taken out at a 30% premium. And looking at DSW, I crunched numbers and $43 is entirely possible," she says.

Patty Edwards, who also follows retail closely, is keeping her eye on another retailer – Avon . Britain’s Daily Mail reported that L'oreal could soon offer around $44 a share for beauty products maker.

“If it happens it suggests Loreal is looking for the sales networks, says Edwards. And who else has that kind of direct to consumer model – Herbalife.”





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Trader disclosure: On October 12th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Finerman’s Firm owns (ARO); Finerman owns (GOOG); Finerman’s Firm owns (IBM); Finerman and Finerman’s Firm own (JPM); Finerman’s Firm own (MCD); Finerman’s Firm owns (RIG); Fienrman’s Firm owns (WMT); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts; Seymour owns (AAPL), (GE), (GOOG), (INTC), (MON), (MSFT), (MOS), (POT)

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