CHICAGO, Jan. 20, 2011 /PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today published its Merger & Acquisition Outlook for 2011, a comprehensive research report that outlines merger and acquisition trends by sector, identifies the 100 most likely takeover candidates across Morningstar's equity coverage universe, highlights the likely acquirers, and examines the implications of merger and acquisition activity for bondholders.
"While global merger and acquisition activity has been on the decline over the last few years, we observed the inklings of a revival in 2010 and expect both the number and size of deals to substantially increase in 2011," said RJ Hottovy, director of equity research for consumer stocks and editor of the report. "We expect some of the key M&A themes to include interest in emerging markets, companies that have mastered a unique niche in their respective industries, and the ability to generate free cash flow."
Morningstar equity analysts identified approximately 100 takeover targets across nine sectors: banking, basic materials, consumer, energy, healthcare, industrials, technology/communication services, and utilities. Potential takeover candidates for each sector were determined by unique and proprietary scoring systems for each sector, based on industry-specific drivers of merger and acquisition activity as well as factors such as free cash flow, management, and capital structure.
Morningstar then examined its list of potential takeover candidates to identify the most compelling stocks for 2011, selecting companies that are the most attractively priced based on their price/fair value ratio and ranking in their respective, sector-specific potential takeover candidate list.
According to Morningstar, the top 10 potential takeover candidates in 2011 are:
- American Eagle
- Clearwire Corporation
- Cloud Peak Energy
- Constellation Energy
- Leap Wireless
- Myriad Genetics
- Petrohawk Energy
- Range Resources
- SunTrust Banks
To view the executive summary of Morningstar's Merger & Acquisition Outlook for 2011 report, please visit: http://global.morningstar.com/M&AOutlook2011.
Morningstar's report also includes a section devoted to Footnoted, a unit of Morningstar that includes Footnoted.com and the Footnoted Pro service. Footnoted released a list of potential takeover candidates for 2011, based on its analysis of Securities and Exchange Commission (SEC) filings. Morningstar acquired the Footnoted business in February 2010.
Footnoted analysts combed through SEC filings, looking for signals that could point to a potential deal, including seemingly innocuous items such as new employment contracts or director and executive changes.
"In 2010, we identified that there were pre-merger signals at more than 40 companies that later announced deals, based on information buried in their SEC filings," said Michelle Leder, editor and founder of Footnoted. "Finding these subtle signals isn't as easy at it sounds. And sometimes, it takes a lot of time for deals to materialize. For example, in March 2009, we found and reported on some interesting disclosures in Jo-Ann Stores' filings that suggested the company might be preparing for an acquisition. Then in December 2010, a deal was announced to take Jo-Ann Stores private."
Footnoted's takeover candidates for 2011 are (in alphabetical order):
- Copano Energy
- Lawson Software
- Leap Wireless
- LKQ Corp.
- Pride International
- Select Medical Holdings
- Stage Stores
- Smurfit-Stone Container
To view the full report on Footnoted's takeover candidates for 2011, please visit: http://global.morningstar.com/FootnotedM&ACandidates2011.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 370,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 4 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. The company has operations in 26 countries.
©2011 Morningstar, Inc. All rights reserved.
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SOURCE Morningstar, Inc.