Broker snap: Man Group on UBS's M and A watch list

24th Apr 2012 10:16

UBS has reiterated its buy recommendation for hedge fund manager Man Group, saying that the firm is a 'likely take-out candidate' and is on the 'UBS M and A Watch List'."With Man Group shares having traded below 150p for a six-month period, we believe that a 50%+ premium bid offer to the current share price would be sufficient to obtain shareholder approval," the Swiss broker said. It estimates that Man is currently trading around the 100p level, 5% below the combined value of AHL being run off, GLG, the institutional business and its net cash position.UBS says that an acquirer would be paying the extra 50% (or $1.35bn) for high-quality global distribution in onshore retail products, with a focus on the $1trn Asia-Pacific and Japanese markets."Growing such exposure organically has proven extremely difficult and costly for many asset managers. We would not be surprised to see a bid from a North American asset manager that is trading on high earnings multiples, has surplus capital and has stated its intent to diversify geographies and product exposures."The broker has cut its target price for Man Group from 165p to 140p due to earnings per share (EPS) downgrades on the back of the recent weak performance of AHL.Shares were reforming strongly on Tuesday, trading 3.89% higher at 96.15p by 10:16.BC