Casino owner Echo Entertainment
Since starting the Specialist Sales Top Takeovers List two years ago, JP Morgan has successfully picked 18 Australian takeover stocks, it said, including Sundance
Top of its 2012 list was a play for Echo, owner of The Star casino in Sydney, by James Packer's rival Crown
Echo is our highest conviction takeover target for 2012, JP Morgan said in the report obtained by Reuters.
Now is the time that Crown has to move if it wants to buy the company at a decent price. Once the (Star casino) capex benefits start flowing through to the bottom line, the share price might be out of reach, it said. Crown already owns a 4.9 percent stake in Echo.
Another possible 2012 play was a takeover of JB Hi-Fi by supermarket leader Woolworths, which has almost completed a strategic review of its Dick Smith consumer electronics division.
There is a good chance that Woolworths will bid for JB Hi-Fi. This will lead to Woolworths having the no 1 consumer electronics business in Australia, the report said. It said a hedge against buying JB Hi-Fi in the event of further weakness in retailers would be to short Harvey Norman
In this volatile market, we believe all pre-event situations should have a good hedge as protection, the note said.
Aston Resources had a good chance of getting a counter bid as its world class Maules Creek asset was the largest coal project in Australia by reserves not owned by one of the majors and this could be the last opportunity before it becomes part of a much bigger portfolio of assets, it said.
Aside from buying Echo, Aston and JB Hi-Fi -- while going short on Crown, BHP and Harvey Norman as a hedge -- JPMorgan said its other top trade idea was to buy Woodside Petroleum and go short on Worley Parsons
With Woodside trading close to its GFC (global financial crisis) lows, we believe BHP may finally make a move on it this year, the report said, noting Shell's remaining 24 percent stake is for sale.
Other possible takeover targets listed were gaming company Tabcorp
Real estate firm FKP Property Group
Resource companies seen as likely targets include Sandfire, PanAust
(Editing by Ed Davies)