Lifting equipment supplier Boom Logistics (BOL) jumped today on high volume as takeover fever gripped the sector.
News that earth moving equipment company Emeco (EHL) had received two takeover proposals from private equity firms ignited speculation that Boom Logistics would be next to attract corporate interest.
Boom Logistics appears to be a more appetising target, on face value at least. The stock is trading on a one-year forecast enterprise value to earnings before interest, tax, depreciation and amortisation (EV/EBITDA) of 3.5 times – or a 15% discount to Emeco.
The stock added 2 cents, or 12.9%, to 17.5 cents at the close, making the stock the best performer on the Uncapped 100.
You might remember that Boom Logistics received a 52 cent a share takeover bid from private equity fund Archer Capital back in 2010, which management subsequently rejected because it “materially undervalued” the company.
That claim turned out to be an exaggeration and Boom Logistics has proved itself to be a perpetual underachiever (see A mining services revival?).
The industrial equipment industry has a track record of catching the eye of private equity companies. Coats Hire is one recent example that comes readily to mind.