Greenberg: 10 Possible Takeover Targets

With Rock-Tenn buying Smurfit-Stone Container , the obvious question: Who’s next?

A week ago, our friend Michelle Leder at Footnoted, a Morningstar site, put out her Top 10 list based on the kinds of things she looks at in regulatory filings.

One of those was Smurfit, which Michelle found attractive in part based on coming and goings and agreements between Smurfit and top execs. She went so far as to write, “We think it’s possible that negotiations for a sale are occurring.”

Her other likely takeovers:

  • Abiomed , the medical device maker, which Morningstar has tagged as an attractive target for the likes of Abbott Labs, Johnson & Johnson or Medtornic.
  • Copano Energy , based in part on the increased amount of severance execs would receive if the company were sold – not to mention risks that it could need new cash.
  • Infinera , in part based on an increase in institutional buying.
  • Lawson Software , which has been under accumulation by Carl Icahn, and whose new stock incentive plan has some interesting wording about change-of-control.
  • Leap Wireless , an on-again, off-again rumored takeover target. Footnoted says it sees “suggestions in Leap’s filings that it remains very much in play.”
  • LKQ Corp , in the wake of “generous” new stock option grants for top execs. “The spate of new change-in-control agreements were unusual, as well.”
  • Pride International , another oft-rumored target, which in recent filings specified that it can accelerate the vesting of stock options if a change-of-control occurs.
  • Select Medical Holdings , where there are various clues that suggest a deal may be in the works, including a change in President Patricia Rice’s contract that revamps “the definition of departing for "good reason" after a deal—among other things, defining it to include no longer letting her work from home, a clause that's very rare, based on all the contracts that we read.”
  • Stage Stores , an under-the-radar retailer that operates such chains as Bealls, Goody’s, Peebles and Stage. What caught Footnoted’s eye? The addition of a new director—a general partner of a private equity shop. That followed some changes in how options and other equity awards are treated in various kinds of terminations.

My take: Without illegal insider information, it’s hard to know for sure which companies will be bought. But given Footnoted's record with Smurfit and a number of deals from last year— including 3Par and Jo-Ann Stores—this list, if nothing else, is a good starting point for further research.

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