Fundie reveals under-the-radar ASX 300 share ripe for takeover

A man watches the share price movement closely.A man watches the share price movement closely.

One fund manager has picked out an S&P/ASX 300 Index (ASX: XKO) share that could be a prime takeover target.

Fundies are always looking for opportunities. For most investment picks, investors are looking for ASX shares that could rise in value and/or pay attractive income to shareholders.

However, the smaller we look down the market capitalisation list, the easier it could be for an external party to buy the whole business.

For example, Sydney Airport was recently taken off the ASX boards in a multibillion-dollar takeover. Big deals can happen.

There have been plenty of other takeovers over the years, including MYOB, Australian Pharmaceutical Industries (API) and Crown.

It’s hard to say for sure if a business is going to become a takeover target, but if it has attractive assets which are not valued highly by the market, or has an attractive earnings profile, then other businesses, superannuation funds or private equity could want to buy that company.

Which ASX 300 share could be a takeover target?

The fund manager Tim Canham from investment outfit First Sentier has named a potential takeover target.

Talking to the Australian Financial Review, Canham was asked if he thinks there are any ASX small cap shares that make appealing takeover targets.

The fund manager named Dalrymple Bay Infrastructure Ltd (ASX: DBI) as that potential opportunity.   

What does it do?

The ASX 300 share describes itself as a “foundation asset”. The Dalrymple Bay Terminal (DBT) aims to provide “safe and efficient” port infrastructure and services for producers and consumers of “high-quality Australian coal exports”.

DBT is supposedly the world’s largest metallurgical coal export facility. It serves as the “global gateway” from the Bowen Basin in Queensland, and the business states it’s a “critical link” in the global steelmaking supply chain.

There are options for capacity expansions to meet “expected strong export demand”.

For shareholders, DBI wants to provide distributions, capital growth, and it will continue to invest.

Why could it be a takeover target?

Canham said, according to the AFR:

We have seen most quality infrastructure stocks picked up by private capital and what I would call “patient capital”. On an attractive yield and with take-or-pay revenues, it looks very defensive in this market environment. The potential for an uplift in its user charges also remains.

According to Morgans, Dalrymple Bay Infrastructure is going to pay a dividend yield of 8.9%.

Share price snapshot

The Dalrymple Bay Infrastructure share price is up around 2% since the start of 2022 and 5% over the past month. However, it is down 5% over the past year.

It closed flat on Thursday at $2.07, giving the ASX 300 share a market cap of $1.02 billion.

The post Fundie reveals under-the-radar ASX 300 share ripe for takeover appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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