These Industrial Giants Are Attracting Interest From Overseas: Rolls-Royce Holding PLC, BAE Systems plc, Amec Foster Wheeler PLC And Weir Group PLC

Rolls-Royce Holding PLC (LON: RR), BAE Systems plc (LON: BA), Amec Foster Wheeler PLC (LON: AMFW) and Weir Group PLC (LON: WEIR) are attracting takeover attention.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The unexpected departure of Rolls-Royce’s (LSE: RR) chief executive, John Rishton, last week has sparked speculation that the company could soon be a takeover target. And after receiving its largest order to date, worth £6.1bn, to supply engines for 50 Emirates A380 planes, Rolls-Royce has become the best company in the engineering space. 

With its rich heritage and an order book that currently stands at around £80bn following the Emirates order, Rolls-Royce is an attractive target for many potential suitors.

The company’s valuation is not overly demanding either. Rolls-Royce currently trades at a forward P/E of 16.3 and a 2016 P/E of 14.8.

Rolls-Royce isn’t the only company attracting attention from overseas. 

Offers to buy

As Rolls-Royce’s engineering experience attracts customers from around the world, buyers are trying to get their hands on one of BAE Systems’ (LSE: BA) businesses. 

Indeed, the company announced today that its US Intelligence and Security sector divisions have attracted external interest and a number of enquiries. As a result, has engaged external advisors to support a strategic assessment of these businesses.

However, as usual there is no certainty that any transaction will occur but any deal would be a welcome cash infusion for the company. The additional cash could fund an additional share buyback or special dividend. 

BAE is currently trading at a forward P/E of 13 and offers a dividend yield of 4.1%. 

Depressed valuation 

Weir Group (LSE: WEIR) is no stranger to takeover speculation. With the company’s shares trading near a two-year low, it has never been a better time for a suitor to make an offer for the company.

Reports have suggested that a bid in the region of 2,500p per share has been considered by a US-based private equity consortium. General Electric has also been named as a potential bidder for the company. 

Unfortunately, Weir’s earnings are set to take a hit this year following a slump in the price of oil.

Analysts expect Weir’s earnings per share to fall by around 23% this year, before rebounding by 8% during 2016. Based on these figures, the company is currently trading at a forward P/E of 17.2, falling to 16.3 during 2016. Weir currently offers a dividend yield of 2.6%. 

Bright outlook

Amec Foster Wheeler (LSE: AMFW) hasn’t received any takeover interest as of yet, but this could be about to change.

Just like Weir, Amec expects weaker trading margins during 2015, as customers press for lower prices amid volatility in the oil market. Falling earnings and a falling share price could entice a bidder.

Amec is one of the engineering sector’s best run companies, and the group is slashing costs to remain competitive. The deal to buy Foster Wheeler last year will also boost earnings, and these two factors could make the company an attractive target for potential buyers.

City analysts predict that Amec’s bottom line will remain flat this year, with growth of 6% expected next year. Amec currently trades at a forward P/E of 11.5 and offers a dividend yield of 4.7%. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Weir. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Up 670% in 2 years! This former penny share is skyrocketing on SpaceX contracts

Shares of Filtronic (LON:FTC) were soaring to multi-year highs today after another contract win with SpaceX. Should I buy this…

Read more »

Investing Articles

Why is the Greatland Gold (GGP) share price up 10% today?

Our writer looks at the reasons why the Greatland Gold (GGP) share price is the AIM 100’s best performer today.

Read more »

Passive income text with pin graph chart on business table
Investing Articles

What do I need for a passive income of £100k a year?

How much would I need to invest to collect a very healthy yearly passive income on my retirement? Surprisingly, the…

Read more »

US Stock

£2k invested in Nvidia stock 2 years ago is now worth this boggling amount…

Jon Smith details how much unrealised profit an investor would have from buying Nvidia stock but is cautious about what…

Read more »

Investing Articles

2 value stocks that still look cheap despite the FTSE rally!

Harvey Jones picks out two UK value stocks that still look nicely priced even as the UK index climbs. He…

Read more »

Dividend Shares

I asked ChatGPT to build the perfect passive income portfolio and here’s the result

Jon Smith turns to the world of AI to try and find out whether ChatGPT could build an investor a…

Read more »

Investing Articles

£20,000 to invest? Here’s how the FTSE 100 could deliver a £2,040 passive income

Here are two ways that investors with a lump sum to spend could target a large passive income with FTSE…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Here’s how someone could start investing in 2025 with just £1,000

Planning to start investing in 2025? This writer highlights two very different stocks that might be worth considering for a…

Read more »