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Nomura suggests a pick-up in merger activity and tips 35 possible targets

Bank says US deals picking up and many companies have strong balance sheets for bids

Could we be about to see a burst of merger activity?

Analysts at Nomura think it is a distinct possibility. In a 16 page note called Bids please, they say that M&A activity has not played a major part in the post-2009 market recovery, but this could change in 2012 and beyond. They have a number of reasons for this:

M&A intensity has been rising in the US, and in the past this has been shown to lead activity levels in Europe.

Many large cap blue-chip companies have strong balance sheets as well as access to low-yielding debt finance, should they need it.

Bid premiums have averaged over 30% in the past three months in Europe, suggesting that corporate buyers can find plenty of value, while episodes of high premium in the past have proved good buying points for equities in general.

Nomura’s strategists – with the help of their sector analysts – have come up with a list of 35 stocks they believe could be candidates for an approach.

These include Tui Travel, which has often been tipped as a takeover target for its parent company Tui AG; Whitbread, which reports figures on Tuesday; Imperial Tobacco, recently said to be in the sights of Japan Tobacco or BAT or a combination of both; J Sainsbury, where talk of interest from its Qatari shareholder recently re-emerged; and satellite operator Inmarsat, which recently fell back after problems at its US partner LightSquared.

Others on the list include Cable & Wireless Worldwide – where Vodafone has admitted it is considering a move – Amec, Shire, AstraZeneca and Soco International.

The rest of the list is: Avocet Mining, First Quantum Minerals, SAS AB, Panalpina Welttransport, DSV, Beiersdorf, Distribuidora Internacional de Alimentacion, John Wood Group, TAG Oil, Banco Comercial Portugues, Banco BPI, Piraeus Bank, Schweizerische National Versicherings-Gesellschaft, Nobel Biocare, Spirent Communications, CSR, TomTom, Logitech International, Severn Trent, Pennon, Endesa, Informa, Aegis Group, TDC, and TalkTalk Telecom. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds