Global Tech Companies That May Be Acquired in 2016

2016 will be a robust M&A market and there are several already public companies that might be ripe for picking, a new Merrill Lynch analyst note predicts.

The large cash balances of large cap internet companies combined with the suddenly attractive small-cap valuations of others may contribute to an uptick in public companies cannibalizing each other.

Here are the seven companies that Merrill Lynch singled out in its analyst note as M&A targets for 2016.

Groupon

Potential acquirers: Google

Reasoning: "Groupon was a target of Google before it went public in 2012, has had recent management changes, and according to press reports some companies may still be interested." Merrill Lynch writes. "However, newly appointed CEO, Rich Williams, was quoted as saying the company has not received any takeover offers."

Stock performance: In January 2014, Groupon traded for more than $11 a share. Two years later, the company is priced at $2.60, a 76 percent decline.

Yelp

Potential acquirers: Google, Yahoo, or Priceline

Reasoning: "Yelp could be a good fit for Google, Yahoo and even Priceline per press articles. Its large user audience and advertiser base has taken years to build, and could be an interesting asset for companies trying to build a bigger mobile or local presence," Merrill Lynch wrote.

Stock performance: At its high in March 2014, Yelp was trading for $98 a share. Since then, the company has lost nearly three quarters of its value and is listed for $22.15.

GrubHub

Potential acquirers: Yelp or Amazon

Reasoning: "GrubHub could be a fit with local services providers such as Yelp to support their own restaurant delivery businesses. In 2014, Nasdaq reported that Amazon could interested in acquiring GrubHub as a way to accelerate its expansion into new markets. Amazon operates its own local restaurant delivery service in select markets and could look at GrubHub as a way to accelerate its expansion into new markets," Merrill Lynch wrote.

Stock performance:The drop-off for GrubHub didn't come until April 2015. Throughout 2014, GrubHub's stock rose from $34 to around $46 a share at its peak. Since April though, GrubHub has lost half its value and now trades around $21.

Pandora

Traders work at the kiosk where Pandora internet radio is traded on the floor of the New York Stock Exchange June 15, 2011.

Potential acquirers: Sirius

Reasoning: "Pandora could be a target for another music service provider. At an investor event earlier in 2015, the CEO of Sirius indicated that Pandora could fit with the company's strategy of monetizing the large number of automobiles that are not subscribing or actively trialing a music service," Merrill Lynch wrote.

Stock performance: In February 2014, Pandora stock reached its high at $38 a share. Since then, the stock has been tumbling lower and two years later, trades closer to $10.

TripAdvisor

Potential acquirers: Priceline or Google

Reasoning: "TripAdvisor could be a fit for OTA rival Priceline or Google for its wealth of traveler review data, according to Bloomberg. Priceline could also look to acquire TripAdvisor to consolidate its share of travel bookings or limit dependence on Google for traffic," Merrill Lynch wrote.

Stock performance: Unlike the other companies on Merrill Lynch's list, TripAdvisor's stock has not been on a clear downward trend the past two years. In January 2014, the stock was priced at $84, only $12 more than the $72 it was trading at two years later. During that time though, the company's shares have sold for as high as $110 in June 2014 and as low as $62 in September 2015.

Twitter

Potential acquirers: "a search engine", likely Google, AOL, Yahoo, or Facebook

Reasoning: "Twitter is struggling with growing users and press articles have highlighted that Twitter content could be a good fit with a search engine looking for more real-time social content to index," Merrill Lynch wrote.

Stock performance: For the first time ever, Twitter shares have crossed below the $20 mark in January 2016. Two years ago, the social network was trading around $60, so it's lost two-thirds of its value.

Shutterfly

Potential acquirers: Unknown

Reasoning: "Shutterfly initiated a sales process in mid-2014 and decided to remain independent following a strategic review, according to Bloomberg," Merrill Lynch wrote.

Stock performance: Reaching a high of $54 in early 2014, Shutterfly's stock has fluctuated up and down in the past two years. While it hit a low in October 2015, trading at $35, the stock has improved slightly to be valued at $39 to start 2016.

(via Merrill Lynch)