With two separate takeovers worth a total of almost $2 billion announced this week, of resin maker Nuplex and governance software supplier Diligent, investment firm Forsyth Barr had updated its predictive tool analysing who could migrate into the S&P/NZX 50 index, broker Suzanne Kinnaird said.
"Our calculations indicate Tourism Holdings and AMP currently rank the highest by six-month market capitalisation,'' she said.
A NZX 50 ranking means greater exposure to institutional investment.
Both of those companies were "closely followed'' by Scales Corporation and Comvita, but the latter was on "liquidity watch'', given liquidity requirements were only "narrowly satisfied'', she said.
Two private US equity funds are after Nuplex and Diligent.
Nuplex shareholders are being offered $5.55 per share, or a total $1.04 billion and Diligent shareholders $7.39, or a total $941 million.
The Nuplex offer is "indicative and non-binding'' with six weeks set aside for an agreement to be reached, while the Diligent offer is a "definitive agreement'' for purchase; both of which will require shareholder approval.
"It is still early days for Nuplex while the offer for Diligent is ... expected to close in the second quarter of 2016,'' Mrs Kinnaird said.
She noted that NZX 50 eligibility was determined by both liquidity and the six-month average of market capitalisation, and ranking could change in that period.
Mrs Kinnaird said the offer for Diligent by Insight Venture Partners was "well timed'', although there was "some uncertainty'' with Diligent; it was rated by Forsyth Barr as a company "rated strongly'' based on its growth potential.
Since the takeover offer, Forsyth Barr had maintained its earnings outlook, but downgraded the target price by 25c to $7.25 and dropped its rating to an "underperform'' recommendation.
While Diligent was NZX listed, because it was incorporated in Delaware, in the United States, only a "simple majority (50% + 1) of combined ordinary and preference shareholders was required to vote in favour of the takeover offer going ahead.
An NZX waiver last month (FEB) allows "interested parties'' to vote; the company directors to vote.
Mrs Kinnaird noted the directors and Delaware Diligent staff represented about 40% of eligible voting shares.
"So this decision is critical, and a simple majority is all that is required for the transaction to progress,'' she said.
She said the proposed Nuplex takeover by Belgian competitor Allnex, owned by Advent International equity fund in the US, was "likely'', with an 80% chance of success.
Nuplex had granted Allnex an exclusive six-week due diligence period, and Mrs Kinnaird said the $5.55-per-share offer was "worthy'' of having an exclusivity period.
"We anticipate the Nuplex board will approve a scheme of arrangement once Allnex satisfactorily completes due diligence,'' she said.
There was no change to Nuplex' earnings outlook by Forsyth Barr, but its target price was increased by 45c to $5.45 and rating recommendation downgraded from "outperform'' to "neutral''.
Any scheme of arrangement entered into would require approval by the relevant regulatory bodies, but Mrs Kinnaird did not see any regulatory issues which would prevent the acquisition being completed.
