2 Stocks up on M&A speculation

The holiday spirit hit Wall Street on Wednesday, with major market benchmarks continuing to gain ground. The Nasdaq Composite (^IXIC) was up nearly 1%, and while earnings for the S&P 500 (^GSPC 0.59%) And Dow Jones Industrial Average (^DJI 0.28%) were more restrained, there was still a palpable optimism among investors as they approached the Thanksgiving break.

Index

Daily percentage change

Daily points exchange

Dow

+0.28%

+96

S&P 500

+0.59%

+24

Nasdaq

+0.99%

+111

Data source: Yahoo! Finance.

One trend that has increased recently has been the interest of companies looking to make strategic moves in the mergers and acquisitions (M&A) market. Wednesday both Coupe software (COUP 28.89%) And Manchester United (MANU 25.84%) have made notable gains on reports that the companies may be up for sale or have attracted the interest of a potential buyer. Despite offering a quick buck, M&A deals can often be bittersweet for long-term investors who wanted to go the distance with a promising company.

Will Vista buy the Coupa?

Shares of Coupa Software are up 29% on Wednesday. The gains came after reports suggested a well-known private equity firm may be looking to acquire the corporate expense management software specialist.

Vista Equity Partners is looking into a possible acquisition of the software-as-a-service company, according to Bloomberg. As with many similar stories, the sources weren’t identified, but they reportedly said that Vista and Coupa have been discussing a possible deal. No deals have been finalized or were likely in the immediate future and it is possible that a rival private equity firm or other interested party could come forward and express interest in acquiring Coupa.

Coupa’s shares have fallen sharply over the past two years, losing more than 85% of its value since the start of 2021 before the most recent jump. The decline came as Coupa business momentum slowed significantly. In its most recent results for the fiscal second quarter, which ended July 31, sales were up just 18% year over year and adjusted net income was down nearly a fifth from the year-ago period. .

While near-term headwinds could continue to hurt Coupa in its growth efforts, takeover interest suggests share prices have fallen enough to entice some institutional investors to privatize attractive businesses. This is a trend that started before the latest Coupa news, and it won’t be the last to be the subject of takeover speculation.

Is Man U for sale?

Meanwhile, shares of English soccer giant Manchester United closed 26% up on Wednesday. The gains follow the team’s announcement that it is seeking strategic alternatives for the club.

Investors often interpret the term “strategic alternatives” to mean that a certain company is putting itself up for sale, inviting interested bidders to acquire it.

Technically, however, strategic alternatives can include a number of other actions, including convincing a major investor to make a new investment in the company, forming a strategic alliance or partnership with another company, selling chunks of a company retaining other parts of it or turning transferring parts of an enterprise into separately negotiated entities.

The challenge facing Manchester United investors is that commercially, the team has not been hugely successful. The club have been unprofitable for three consecutive years and, after dominating their league for much of the 1990s and 2000s, Man U have not won the English Premier League title since the 2012-13 season and remain outside the top four teams this season. also.

Fans want more investment in the club so it can regain its competitive position at the top of English football. Yet that involvement itself has created challenges for the teams in the past and could also complicate any negotiations for a potential Man U sale.

Dan Caplinger holds no position in any of the stocks mentioned. The Motley Fool has locations and recommends Coupa Software. The Motley Fool has a disclosure policy.

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