Darktrace share price soars 20% on takeover news! Who could be next?

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.

The Darktrace share price jumped by 20% at the time of writing after the British cybersecurity firm said it was in early-stage takeover talks.

Darktrace said it was in discussions with technology investment company Thoma Bravo regarding a cash offer. Talks are currently in a preliminary stage and Thoma Bravo has until 12 September to confirm its intention.

Following the Darktrace share price

Shares of British fashion brand Ted Baker also soared by 17% after a cash offer by Authentic Brands. The Forever 21 owner agreed to buy Ted Baker for 110p per share, in a deal worth around £211m.

With the pound trading near an all-time-low against the dollar, UK shares could look particularly attractive to larger US firms or private equity investors.

That got me thinking. Which British shares could be targeted next?

Top British shares

I’d look for companies that own strong brands that could fit nicely within much larger global competitors. For instance, I reckon Fevertree Drinks (LSE:FEVR) might look attractive to a drinks giant like Coca Cola or Pepsico.

Fevertree is a market leader in the premium tonics category. It operates an asset-light model that allows it to generate a double-digit return on capital employed. That’s a key measure of business quality, in my opinion.

It experienced phenomenal growth since being founded in 2005. It benefited by being a first-mover in this segment and quickly expanding its distribution network across dozens of countries.

That said, it has attracted competition over the years. So it remains to be seen if Fevertree can maintain its high profit margins and market share.

Overall though, it’s a cash-rich business with no debt. Its share price has also tumbled by 54% over the past year. I reckon it would make an attractive bid target. But even if a deal doesn’t happen, I’d still buy these shares for its brand value and quality characteristics.

Cash in the sofas

Next, I reckon furniture and flooring business SCS (LSE:SCS) is ripe for a takeover. With a market capitalisation of just £55m, it’s tiny. But it has a lot going for it, in my opinion.

It’s one of the most cash-rich companies that I’ve come across and has more cash than its market cap. That could be a highly attractive factor for a potential buyer.

Regardless of any possible attractor, I’d buy this share for its 9% dividend yield alone. Its share price has already fallen by 46% over the past year and I reckon it has priced in a significant slowdown in customer activity. It now trades at prices last seen at the height of the pandemic.

Many smaller competitors might struggle to survive in this sector as the rising cost of living impacts spending on big-ticket items like sofas. Bear in mind that in the short term, this could affect SCS too but the strength of its balance sheet suggests that it should survive. Overall, I reckon it would make a solid long-term holding for my Stocks and Shares ISA. But hopefully one day, a potential suitor will come along and SCS will soar like the Darktrace share price.

The post Darktrace share price soars 20% on takeover news! Who could be next? appeared first on The Motley Fool UK.

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Harshil Patel has no position in any of the shares mentioned. The Motley Fool UK has recommended Fevertree Drinks. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.