The Motley Fool

What next for these top FTSE 250 takeover targets?

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.

Man shuffling cards
Image source: Getty Images

It’s been a rollercoaster day for holders of second-hand vehicle seller BCA Marketplace (LSE: BCA) so far. Despite releasing a more-than-decent set of full-year results, shares fell well over 3% in early trading only to recover strongly.

With takeover talk still fresh in the minds of holders, where next for the mid-cap’s share price?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Record performance

Thanks to a combination of strong organic growth and the full-year impact of acquisitions, revenue rose just under 20% from £2.03bn to £2.43m in the 12 months to the end of April — more than the £2.3bn analysts were expecting.

BCA achieved “increased volumes across all divisions” over the reporting period, including a 6.5% rise in the UK where the company shifted more than one million vehicles. International Vehicle Remarketing sales rose 4.3% to 362,000 and WeBuyAnyCar delivered its sixth consecutive year of double-digit volume with 219,000 sales (up 12.9%). All this helped the company achieve a 17.6% rise (to £159.5m) in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) and reduce net debt by 26.4% to £191.6m.

Having already rejected a £1.6bn bid (equivalent to 200p per share), today’s record results have clearly come at the right time for BCA and will help to justify the company seeking an improved offer from private equity firm Apax. Whether this materialises before the 8 July deadline, however, is questionable. 

The fact that BCA has managed to turn things around following concerns over falling demand for new and used vehicles in the UK (causing the shares to sink to as low as 150p back in March) could mean that Apax no longer sees value in the deal. Should this be the case, a spate of profit-taking might kick in as traders see limited upside. Given BCA’s already punchy valuation before today, there’s some logic in that. 

It’s a hard one to call. Since it would be against the Foolish philosophy of buying great companies and holding for years rather than days, I certainly wouldn’t recommend picking up the stock as a short-term punt.

Another bid target

Of course, BCA isn’t the only company attracting attention right now. That said, the situation at serviced office provider IWG (LSE: IWG) feels more complicated. 

Yesterday’s update on trading wasn’t well received by the market with shares falling almost 3% as the company announced that operating profit would be between £15m-£20m lower than that previously forecast.  

In addition to stating that its UK business wasn’t performing as well as expected, IWG revealed that plans to grow its network to satisfy increasing demand would now cost in the region of £30m more than the £200m originally forecast thanks to management’s desire to increase the number of locations from 230 to 275.

With four prospective buyers (Terra Firma, TDR Capital, Starwood Capital and Prime Opportunities) eyeing up the company, the timing of this news wasn’t great. While having multiple suitors will give some reassurance to those already holding stock in the £3bn cap, the fall in profit guidance might lead it to be sold for less than previously hoped.

Clearly, a lot depends on just how patient a buyer is willing to be in order to reap the “good returns” IWG’s management think are possible following the planned investment. With world markets looking increasingly jittery over recent weeks, however, a deal may not look as appealing as it once did. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.