Brookfield (BAM.A) & Onex vie for Modulaire. Which stock is better buy?

Canadian companies Brookfield Asset Management Inc (TSX:BAM.A) and ONEX Corporation (TSX:ONEX) are said to be vying to acquire European firm Modulaire Group.

The deal to purchase Modulaire, which builds and designs modular workspaces, could reportedly be valued at US$ 5.4 billion. If finalized, it is expected to rank among the biggest deals in Europe this year.

While it is too early to tell who will win the bidding, investors appear to be throwing their weight behind ONEX as its stock climbed 2.1 per cent on Thursday, June 17. Brookfield Asset's share prices, on the other hand, declined by about one per cent in the last trading session.

Looking into the overall financial services sector, the S&P/TSX Financial Index presently records a climb of 21.3 per cent year-to-date (YTD) and the adjusted market cap of C$ 913.9 billion.

Brookfield Asset Management Inc (TSX:BAM.A)

On Tuesday, June 16, Brookfield Asset stock clocked a 52-week high of C$ 62.06. Its share price surged by eight per cent in the last three months and climbed about 16 per cent YTD. At market close on June 17, the scrip was priced at C$ 60.92.

1-year chart of stock performance, relative strength index and moving average exponential of Brookfield Asset (Source: Refinitiv)

Brookfield Asset offers a return on assets of 0.4 per cent, while its return on equity is 4.1 per cent, as per TMX data. The asset management company pays US$ 0.13 per share as a quarterly dividend, with a present dividend yield of 1.039 per cent.

In Q1 2021, Brookfield Asset posted a net income of US$ 3,776 million, as compared to a net loss of US$ 157 million in Q1 2020. Its revenues were, however, down to US$ 16,410 million in the first quarter of 2021.

ONEX Corporation (TSX:ONEX)

Priced at C$ 88.91 apiece at market close on June 17, ONEX stock soared by 45.6 per cent in the past year, surpassing the TSX 300 Composite Index's growth of 11.5 per cent.

ONEX distributes a quarterly dividend of C$ 0.1 per share, which grew at a rate of 9.9 per cent in the last three years.

As per the data from TMX, the C$ 7.98-billion market cap company holds a debt-to-equity ratio of 0.48 and a price-to-earnings ratio of 3.

1-year chart of stock performance, relative strength index and moving average exponential of ONEX Corporation (Source: Refinitiv)

ONEX Corporation's total segment net earnings were US$ 472 million in the first quarter of 2021. In the same period, ONEX' private equity investments had a gross return of eight per cent.

Modulaire Group

Earlier this year, there were speculations that Modulaire was looking to go public via an initial public offering (IPO).

In the first quarter of 2021, Modulaire recorded total revenues of 320 million euros, reflecting an increase of 27 per cent year-over-year (YoY).

Final bids to buy Modulaire are likely to come in in the next few days, although there are chances that more companies will enter the bidding war to buy the European company.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view. The reference data in this article has been partly sourced from Refinitiv.



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