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Are Takeovers Imminent For Monitise Plc, Rolls-Royce Holding PLC, Imagination Technologies Group plc And McColl’s Retail Group PLC?

With the convenience store sector delivering impressive growth versus traditional, large supermarkets, McColl’s (LSE: MCLS) could be a bid target. Certainly, the UK convenience store space is becoming increasingly saturated, but McColl’s could be a useful addition to a supermarket that already has a convenience store offering, or another company seeking to diversify into the sector.

With McColl’s trading on a price-to-earnings (P/E) ratio of just 10.9, it appears to offer excellent value for money. As such, a bidder could buy the company with a significant margin of safety, thereby increasing the appeal of McColl’s at the present time.

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Path to growth

Similarly, Rolls-Royce (LSE: RR) could also be a bid target, with the defence and aerospace company having a very lucrative operation despite recent challenges. Under its new management team, Rolls-Royce has a clear path towards growth and with its bottom line due to rise by 32% next year, it appears to be on track to deliver improved performance.

Furthermore, with the US economy moving from strength to strength, the outlook for the wider defence sector is rapidly improving. This could convince a potential suitor to acquire Rolls-Royce ahead of what could be a purple patch for the industry.

Value for money

Also in the midst of a turnaround is Imagination Technologies (LSE: IMG). It was in talks recently with Apple concerning a potential takeover and while they didn’t come to fruition, Imagination Technologies remains cheap and the company also has a bright future.

Under a new leadership team, it’s possible for the company to turn its financial performance around. Like Rolls-Royce, strong earnings growth is forecast for Imagination Technologies next year, with the company expected to grow its bottom line by 40%. And with it trading on a PEG ratio of just 0.6, it seems to offer excellent value for money, thereby making it a potential bid target for a sector peer.

Watch and wait

Meanwhile, Monitise (LSE: MONI) may prove to have less of a chance of being bought than McColl’s, Rolls-Royce and Imagination Technologies. That’s at least partly because the mobile payments solutions provider is struggling to turn a great product into a great business, with Monitise still being in the red, despite winning major clients and having a top-notch product.

Looking ahead, the payment technology space is likely to change at a rapid rate and while Monitise’s offering may be popular now, there’s no guarantee that will be the case in the coming years. As such, potential suitors may develop their own in-house capabilities or else look to partner with other companies, given the relatively high capital demands of such an offering. Therefore, while Monitise could turn its fortunes around, it seems to be a stock to watch rather than buy for potential acquirers and investors alike.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of Imagination Technologies and Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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