SA Roundtable: Which companies are likely to be acquired soon?

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Maksim Labkouski

In a recent Seeking Alpha poll, we asked readers which publicly traded companies they thought could be acquired in the near term.

Out of the 291 readers who responded, 9% chose BP (NYSE:BP [https://seekingalpha.com/symbol/BP]) as their top pick, followed by Norfolk Southern (NSC [https://seekingalpha.com/symbol/NSC]), Intel (NASDAQ:INTC [https://seekingalpha.com/symbol/INTC]), Warner Bros. (NASDAQ:WBD [https://seekingalpha.com/symbol/WBD]), CoreWeave (NASDAQ:CRWV [https://seekingalpha.com/symbol/CRWV]), Rocket Lab (RKLB [https://seekingalpha.com/symbol/RKLB]), SentinelOne (NYSE:S [https://seekingalpha.com/symbol/S]) and CSX (CSX [https://seekingalpha.com/symbol/CSX]). It should be noted that in the days following the survey, Union Pacific (UNP [https://seekingalpha.com/symbol/UNP]) and Norfolk Southern (NSC [https://seekingalpha.com/symbol/NSC]) announced plans to merge.

We asked Seeking Alpha analysts Oliver Rodzianko [https://seekingalpha.com/author/oliver-rodzianko], Daniel Jones [https://seekingalpha.com/author/daniel-jones] and Jonathan Weber [https://seekingalpha.com/author/jonathan-weber] which companies they thought could be takeover targets.

WHICH COMPANIES DO YOU THINK ARE LIKELY TO BE ACQUIRED IN THE NEAR TERM?

Oliver Rodzianko [https://seekingalpha.com/author/oliver-rodzianko]: The cybersecurity industry has seen a lot of consolidation in recent years, and SentinelOne (NYSE:S [https://seekingalpha.com/symbol/S]) has reportedly attracted acquisition interest in the past. As recently as 2023, it was reported that SentinelOne (NYSE:S [https://seekingalpha.com/symbol/S]) explored a potential sale, attracting private equity, in particular. The company’s market cap of about $6 billion is substantial but certainly reasonable for an M&A target. CrowdStrike (CRWD [https://seekingalpha.com/symbol/CRWD]) or Palo Alto Networks (PANW [https://seekingalpha.com/symbol/PANW]) could integrate SentinelOne’s AI-driven autonomous security into their existing platforms and get a dual benefit of removing some competition from the table while strengthening their hand.

Jonathan Weber [https://seekingalpha.com/author/jonathan-weber]: BP (NYSE:BP [https://seekingalpha.com/symbol/BP]) could be an acquisition target. Compared to the other supermajors, its market capitalization is relatively low, and its repeated strategic shifts over the last couple of years have made some investors want change when it comes to leadership. An acquisition, such as by Shell (SHEL [https://seekingalpha.com/symbol/SHEL]), could provide that.

Daniel Jones [https://seekingalpha.com/author/daniel-jones]: Seeing as how one of my favorite companies, Norfolk Southern (NSC [https://seekingalpha.com/symbol/NSC]), has already been confirmed to be in a transaction, I will ignore that one. But another major candidate that has been rumored to be a buyout target is none other than energy giant BP (NYSE:BP [https://seekingalpha.com/symbol/BP]). Rumors have been circulating for a while now that it might be the target of a purchase by Shell plc (SHEL [https://seekingalpha.com/symbol/SHEL]). This would be a massive transaction, perhaps serving as the largest or one of the largest deals in the history of the industry.

It does seem unlikely that Shell will proceed with this purchase, however, as in late June the company said that it "has not been actively considering making an offer for BP and confirms it has not made an approach to, and no talks have taken place with, BP with regards to a possible offer."

This does not mean a transaction with another suitor might not happen. Usually when rumors begin circulating like this, it means that other players are considering a move of their own. Even though it's not in the oil and gas space, take the saga of U.S. Steel as an example. In 2023, Cleveland-Cliffs (CLF [https://seekingalpha.com/symbol/CLF]) proposed to buy the company, only for Japanese steel manufacturer Nippon Steel (OTCPK:NPSCY [https://seekingalpha.com/symbol/NPSCY]) (OTCPK:NISTF [https://seekingalpha.com/symbol/NISTF]) to make the purchase.

The fact of the matter is that the traditional energy space offers the opportunity for significant cost savings, and a consolidation of the industry will likely be needed as time goes on since there will be a gradual transition away from fossil fuels.

WHAT DO YOU THINK OF THE SA READERS' PICKS? ARE THERE ANY STRONG CANDIDATES MISSING FROM THE LIST?

Oliver Rodzianko [https://seekingalpha.com/author/oliver-rodzianko]: I think most of the SA readers’ picks are of companies that are too large and have too entrenched a position in their respective industries, making a full acquisition of them unlikely. That said, certain segments from many of the businesses outlined could certainly be divested, and I wouldn’t be surprised.

In terms of a full takeover, DocuSign (NASDAQ:DOCU [https://seekingalpha.com/symbol/DOCU]) makes sense for Salesforce (CRM [https://seekingalpha.com/symbol/CRM]), Adobe (ADBE [https://seekingalpha.com/symbol/ADBE]), or Microsoft (MSFT [https://seekingalpha.com/symbol/MSFT]) to buy, and Pinterest (NYSE:PINS [https://seekingalpha.com/symbol/PINS]) could definitely work as a takeover by Meta (META [https://seekingalpha.com/symbol/META]). But M&A at the large public market scale is quite fickle—it takes a buyer with a nuanced long-term strategy to be willing to sacrifice near-term cash for a larger moat; that’s why it’s difficult to predict.

Jonathan Weber [https://seekingalpha.com/author/jonathan-weber]: Many of the picks by readers have one thing in common: operational problems or subpar execution. That's true for BP (BP [https://seekingalpha.com/symbol/BP]), Intel (NASDAQ:INTC [https://seekingalpha.com/symbol/INTC]) and Warner Bros. (NASDAQ:WBD [https://seekingalpha.com/symbol/WBD]). By being acquired by a stronger company and getting a new management team, this subpar execution could cease to be a problem; thus, it seems logical that these companies could be acquisition targets. Also, tech is a hot sector where deep-pocketed players are constantly looking for ways to grow inorganically; thus, SentinelOne (S [https://seekingalpha.com/symbol/S]) and CoreWeave (NASDAQ:CRWV [https://seekingalpha.com/symbol/CRWV]) could be targets as well.

Daniel Jones [https://seekingalpha.com/author/daniel-jones]: Even though it is a considerably smaller firm, I believe that one very interesting buyout candidate could be Topgolf Callaway Brands (NYSE:MODG [https://seekingalpha.com/symbol/MODG]), but only after the company splits off its Topgolf business next year. As I've detailed in articles in the past, the business looks incredibly cheap, especially compared to a player such as Acushnet Holdings (GOLF [https://seekingalpha.com/symbol/GOLF]). Picking up a competitor on the cheap could be a way to generate significant shareholder value. But to be clear, there have not been any rumors of a potential transaction yet. I am basing this solely off of what I know of both firms and how attractive Topgolf Callaway Brands currently is at the moment.

DO YOU THINK M&A ACTIVITY WILL PICK UP, SLOW DOWN, OR REMAIN THE SAME FOR THE REST OF THE YEAR?

Oliver Rodzianko [https://seekingalpha.com/author/oliver-rodzianko]: If rates get cut twice in the latter half of 2025, M&A activity will increase, and it certainly will increase in 2026 as the Fed becomes more dovish. There’s currently strong secular growth in major industries like tech, healthcare, and renewable energy, so players in strong positions looking to capitalize on renewed macro strength will certainly start to eye up deals.

The end of 2025 could be the sweet spot for companies with a strong cash position, because valuations will stay tempered, and by mid-2026, the deals will be a lot more expensive. That’s if the companies aren’t issuing debt for their acquisitions, in which case the lower-rate environment in 2026 would be a better time to buy. Geopolitical conditions are also easing, which makes businesses more confident in being operationally adventurous due to the notion of a stable revenue horizon.

Jonathan Weber [https://seekingalpha.com/author/jonathan-weber]: M&A activity could pick up if the Federal Reserve lowers interest rates later this year -- cheaper money could be a boost for dealmaking. The current administration is more laissez-faire when it comes to M&A compared to the previous one, which could also have a positive impact on acquisitions. If there is no interest rate cut, dealmaking would likely remain at the level we have seen in recent months.

Daniel Jones [https://seekingalpha.com/author/daniel-jones]: As I detailed recently in one of my articles, I firmly believe that the U.S. economy is heading into a recession. The tariff situation poses significant near-term risks for a stagflationary environment. And that is beginning to show up in the data already. Usually, during a downturn, deal flow slows down. So I do fully expect, when combined with elevated interest rates, for the pace of mergers and acquisitions to drop moving forward. Of course, once the economy bottoms out and stabilizes, and once interest rates decline, the shoe will be on the other foot. Companies will be in a better position to pick up other firms at good prices. And capital will be cheaper.

MORE ON BP P.L.C., DOCUSIGN, ETC.

* CoreWeave Is In A Catch-22: We See 2 Windows To Buy [https://seekingalpha.com/article/4813097-coreweave-is-in-a-catch-22-we-see-2-windows-to-buy]
* Docusign: IAM Platform And Expansion Into CLM Market Likely To Accelerate Revenue Growth [https://seekingalpha.com/article/4812596-docusign-iam-platform-and-expansion-into-clm-market-likely-to-accelerate-revenue-growth]
* CoreWeave: I Am Not Buying Into Q2 But Getting Paid 9% [https://seekingalpha.com/article/4812268-coreweave-i-am-not-buying-into-q2-but-getting-paid-9-percent]
* CoreWeave's long-term growth story remains intact, but analysts identify near-term overhangs [https://seekingalpha.com/news/4484636-coreweaves-long-term-growth-story-remains-intact-but-analysts-identify-near-term-overhangs]
* CoreWeave falls on Q2 EPS miss [https://seekingalpha.com/news/4484114-coreweave-falls-on-soft-q2-earnings]