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Need help predicting M&A takeover targets? Add to ...

Talk about a snipe.

In mid-January, Footnoted, a financial blog that Morningstar recently bought, released its top 10 2011 U.S. takeover targets. The report identified Smurfit-Stone Container Corp. as one of the top contenders and about a week later, Rock-Tenn Co. came in with an offer for $3.5-billion (U.S.).

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It gets better. Pride International was also listed as a top target, and on Monday Ensco PLC put in a bid to buy Pride for $7.3-billion.

While these two deals could just be extremely good luck for Footnoted, they certainly make it worthwhile to look a little deeper at the initial report. Plus, the company has a unique way of making its predictions. On top of looking at corporate fundamentals, it also digs through financial statement footnotes to pick up on any irregularities. (Hence the name Footnoted.)

Because Footnoted does not rank the targets from most likely to least likely, here's a look at the three largest that remain.

Auto parts maker LKG Corp. is the biggest with a market capitalization of about $3.6-billion. Footnoted said the company has a strong cash flow and a dominant industry position, but what really matters is that the long-time chief executive has agreed to step aside over the next year and some interesting stock option grants have been awarded.

Mid-steam oil and gas company Copano Energy is another name on the list, with a market cap of $2.2-billion. The company recently increased the amount of severance executives would receive if the company is sold and also added 18 months of health care benefits. TPG Capital is a current investor.

Lawson Software is the third-largest remaining target, with a $1.6-billion market cap. The company creates software for clients across a slew of industries, including manufacturing and health care. Just as Carl Icahn increases his stake in the company, Lawson is implementing changes to accelerate stock vesting and to waive restrictions in the event of a change of control.

Without going into detail on the remaining names, the other takeover target picks include Abiomed, Infinera, Leap Wireless International, Select Medical Holdings and Stage Stores.

 

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