In turbulent times when no one knows whether the market will be up or down next week, next month or next quarter, you may have to think laterally.
One outside-the-box strategy might be to figure out which ASX shares have been hammered so much that buying out the entire company might be an absolute bargain.
If a business is in this position, it can attract acquisition interest from other ASX-listed companies or even private capital.
Sydney Airport is a prime example of this. Australia’s busiest airport was delisted from the ASX earlier this year after it was bought out by a consortium that included giant superannuation funds.
So if you want to take this line of thinking, Shaw and Partners senior investment adviser Adam Dawes this week had a couple of ASX shares in mind.
Last infrastructure stock left standing on the ASX
Dawes nominated APA Group (ASX: APA) and Lottery Corporation Ltd (ASX: TLC) as potential acquisition targets.
APA Group is a gas and electricity infrastructure company that’s seen its shares rise more than 13% year-to-date, all while handing out a nice 3.9% dividend yield.
Infrastructure is seen by many as a defensive holding through economically difficult times. Plus gas and electricity are at record prices courtesy of the war in Ukraine.
“There’s no [other] infrastructure stock on our market anymore,” Dawes told Switzer TV Investing.
“APA is one of those ones that I think is fairly ripe for a takeover.”
Could the demerger become a merger?
The Lottery Corporation has only been on the ASX since late May after it was demerged from Tabcorp Holdings Limited (ASX: TAH).
Ever since it was spun off, experts have commented on how cheap it is for a defensive business that boasts long-term client contracts and very resilient revenues even through economic downturns.
“There’s been a little of scuttlebutt around the market around [how] The Lottery Corporation is going to be a potential takeover target,” said Dawes.
He explained that Star Entertainment Group Ltd (ASX: SGR) appointed a new chief executive this month in Robbie Cooke. Cooke was formerly the boss of Tatts Group, which was the lotteries business that originally merged into Tabcorp.
“He was instrumental in the merger of Tabcorp and Tatts in the heyday,” said Dawes.
“I think that’s why Star potentially might have a look at The Lottery Corporation.”
He noted, though, that this is pure market speculation. No actual interest has yet been expressed by Star or Cooke.
“Please seek professional advice before you do anything!”
