Tencent Holdings’ 5% stake this month in Afterpay supercharged the latter’s share price, sparking speculation that heightened takeover activity in Australia is imminent.
Takeover talk is predictable with the S&P/ASX 200 Accumulation index down almost 18% this year and the Australian dollar well down on a year ago. Coronavirus has pummelled strong and weak companies, creating opportunity for cashed-up predators.
Caution is needed. As I have written many times, never buy companies on the basis of takeover speculation alone. In some ways, identifying a takeover target is the easier part: getting the timing right is much harder. Some takeover targets stay that way for years.