Theunexpected departure ofRolls-Royces(LSE: RR) chief executive, John Rishton, last week has sparked speculation that the companycouldsoon be a takeover target. And after receiving its largest order to date, worth 6.1bn, to supply engines for 50 Emirates A380 planes, Rolls-Royce has become the best company in the engineering space.
With its rich heritageand an order book that currently stands at around 80bn following the Emirates order, Rolls-Royce is an attractive target for many potential suitors.
The companys valuation is not overly demanding either. Rolls-Royce currently trades at a forward P/E of 16.3 and a 2016 P/E of 14.8.
Rolls-Royce isnt the only company attracting attention from overseas.
Offers to buy
As Rolls-Royces engineering experience attracts customers from around the world,buyers are trying to get their hands on one ofBAE Systems(LSE: BA) businesses.
Indeed, the company announced today that itsUS Intelligence and Security sector divisions have attractedexternal interest and a number of enquiries. As a result, has engaged external advisors to support a strategic assessment of these businesses.
However, as usual there isno certainty that any transaction will occur but any deal would be a welcome cash infusion for the company. The additional cash could fund an additional share buyback or special dividend.
BAE is currently trading at a forward P/E of 13 and offers a dividend yield of 4.1%.
Weir Group(LSE: WEIR) is no stranger to takeover speculation. With the companys shares trading near a two-year low, it has never been a better time for a suitor to make an offer for the company.
Reports have suggested that a bid in the region of 2,500p per share has been considered by a US-based private equity consortium. General Electric has also been named as a potential bidder for the company.
Unfortunately, Weirs earnings are set to take a hit this year following a slump in the price of oil.
Analysts expect Weirs earnings per share to fall by around 23% this year, before rebounding by 8% during 2016. Based on these figures, the company is currently trading at a forward P/E of 17.2, falling to 16.3 during 2016. Weir currently offers a dividend yield of 2.6%.
AmecFoster Wheeler(LSE: AMFW) hasnt received any takeover interest as of yet, but this could be about to change.
Just like Weir, Amecexpectsweaker trading margins during 2015, as customers press for lower prices amid volatility in the oil market.Falling earnings and a falling share price could entice a bidder.
Amecis one of the engineering sectors best run companies, and the group is slashing costs to remain competitive. The deal to buy Foster Wheeler last year will also boost earnings, and these two factors could make the company an attractive target for potential buyers.
City analysts predict that Amecs bottom line will remain flat this year, with growth of 6% expected next year. Ameccurrently trades at a forward P/E of 11.5 and offers a dividend yield of 4.7%.
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