There were plenty of acquisitions taking place in 2014, but that could be child’s play compared to what the year ahead may have in store. Companies are holding on to a lot of cash, and with many market watchers betting on volatility, there should be plenty of opportunities for potential buyers to land great deals if they are nimble. Let’s take a look at five companies that make ideal acquisition targets in 2015.
Nuance Communications (NUAN)
Speech recognition is as popular as ever, with smartphones, cars, and even high-end appliances activating at the sound of an owner’s voice. Nuance is the top dog in this niche.
Buyout chatter has been making the rounds for two years, intensifying this past summer when reports surfaced that Samsung (SSNLF) was going to make a play for Nuance. With billionaire activist Carl Icahn taking an interest in Nuance, it wouldn’t be a surprise to see it nudged toward a suitor if the price is right.
The Fresh Market (TFM)
Shares of The Fresh Market took a hit on Tuesday after the abrupt resignation of its CEO. Investors don’t like uncertainty, but that can also work to the advantage of a potential buyer. The high-end grocer could provide traditional grocers an upscale niche concept with plenty of upside, or private equity could make a play to grow The Fresh Market away from the quarterly scrutiny that comes with the territory as a public company.
The Fresh Market went public at $22 five years ago. The shares went on to nearly triple by the summer of 2012, but expansion hiccups have resulted in a stock that has shed nearly half of its peak value. The boutique grocer’s concept is still strong, making it a compelling target here.
We’re now two summers removed from the crazy rumor that PepsiCo (PEP) was going to buy SodaStream for $95 a share. The reports originated in a business publication in SodaStream’s home turf of Israel, and PepsiCo quickly shot down the speculation.
A couple of things have changed to make SodaStream an interesting buyout target, possibly even by PepsiCo itself. For starters, PepsiCo’s two most prominent rivals have thrown their support behind the Keurig Cold system that will hit the market later this year. Instead of following suit, PepsiCo can own the leader in home carbonation outright.
The other thing that has happened is that SodaStream is trading for less than a quarter of the original $95 buyout price. The climate is right, and the price is even better.
Pandora Media (P)
Pandora has been a popular buyout rumor in recent years, and it’s easy to see why. Tech giants have been trying to make a dent in music streaming, and Pandora’s the undisputed leader, with 76.5 million users. It’s serving up 5 billion hours of audio a quarter. Why are the major tech companies trying to succeed by starting from scratch when they can snap up the niche leader before the competition does?
It’s true that subscriber growth is slowing, but revenue growth is on a tear as Pandora gets better at monetizing its streams.
SeaWorld Entertainment (SEAS)
It’s not easy being SeaWorld these days. The marine-life park operator has suffered back-to-back years of attendance declines, and the cry of activists urging SeaWorld to release its orcas is getting louder.
This is a textbook example of a company that can benefit by going private. A turnaround isn’t going to be easy with shareholders clamoring for juicy dividend checks and the business having to live up to Wall Street’s quarterly expectations. SeaWorld’s best shot at winning back public opinion will be as a private company.
Motley Fool contributor Rick Munarriz owns shares of SeaWorld Entertainment and SodaStream. The Motley Fool recommends Nuance Communications, Pandora Media, PepsiCo, SodaStream and The Fresh Market. The Motley Fool owns shares of Nuance Communications, Pandora Media, PepsiCo and SodaStream. Try any of our Foolish newsletter services free for 30 days. Check out The Motley Fool’s one great stock to buy for 2015 and beyond.