ATG, Moneysupermarket and Trainline on Berenberg's M&A watchlist

Berenberg has highlighted Auction Technology Group (ATG), Moneysupermarket.com and Trainline as potential M&A candidates as part of its review of the UK-listed technology, media, and telecom (TMT) sector.

The past two years have seen a large number of UK-listed TMT names being bought out, such as Ideagen, EMIS Group, Micro Focus, Kape Technologies and Euromoney Institutional Investor – something that Berenberg thinks will continue into 2024.

"The trend of UK TMT companies being acquired continued in 2023, typically by US strategic or private equity buyers," Berenberg said in a research note. "We expect this trend is likely to continue, especially when considering the discount applied to the UK market versus, in particular, the US market."

ATG's business model has already attracted the interest of private equity investors, the broker said, and its business model "lends itself nicely to private equity, with optionality to make operational improvements and also increase leverage beyond the appetite of public markets".

Moneysupermarket.com could be up for grabs by an investor following recent share price weakness, with the stock having now fallen nearly 40% since peaking in mid-2019. What's more, price comparison peers uSwitch, confused.com and Facile have all been snapped by private equity entities.

As for Trainline, the company "exhibits all of the hallmarks that private equity likes: highly cash generative, large addressable market opportunity and structural growth drivers", Berenberg said.

Elsewhere in the sector, Berenberg also downgraded its stance on media and publishing company Future from 'buy' to 'hold', and cut its price target from 1,780p to 850p, saying there are "lots of unanswered questions" regarding the outlook and return of organic growth despite the stock's "cheap" valuation.