There’s a lot of interest in UK companies at the moment from a takeover perspective. And there’s a FTSE 250 company that I think might be a plausible acquisition target.

Shares in Dr. Martens (LSE:DOCS) have fallen 79% since it initially appeared on the stock market in 2021. And it’s reached the point the possibility of a takeover looks increasingly plausible.

Speculation?

The idea of Dr. Martens being acquired isn’t just speculation. Earlier this week, the stock jumped as one of its major shareholders pushed for a strategic review considering the possibility of a takeover.

Mario Cibelli – managing member of Marathon Partners Equity Management – said the company being public isn’t in the best interests of shareholders. Instead, management should pursue a sale.

According to Cibelli, the business could be sold for around $2bn to someone able to streamline and improve its operations. That’s 70% higher than the company’s current market value.

That’s an attractive return for investors. But while I’ve been buying Dr. Martens shares for my portfolio, it’s not because I think there’s an opportunity to sell them on to someone at a higher price.

An undervalued stock

Cibelli stated that the company’s share price doesn’t accurately reflect the intrinsic value of the underlying business. And I agree with this, but that makes me want to buy it, not sell it. 

I therefore don’t want the company taken private or sold to a larger competitor. I’d rather keep adding to my own stake in the business while I think the shares are a bargain.

It’s definitely true that Dr. Martens has been facing a difficult trading environment and has made this worse with mistakes of its own. So there’s clear risk with owning the stock going forward.

As I see it, though, there’s a chance to buy a stock that trades at a bargain price right now. So I’d rather take advantage myself than offer it out to someone else.

Who would buy it?

If management does decide to look for a buyer, I don’t think it would be short of options. One that stands out to me as a potential candidate is Deckers Outdoor (NYSE:DECK). 

Deckers owns running shoe brand Hoka and has a boot brand of its own in Ugg. I can see Dr. Martens fitting nicely alongside these as part of its lineup.

Furthermore, the company has done very well lately. At a time when rivals have been struggling with a difficult macroeconomic situation, the business has kept sales growing impressively.

I think Deckers probably has the capacity to fix what ails Dr. Martens. And with its own stock trading at a price-to-earnings (P/E) ratio of 32, the might even be an arbitrage opportunity.

A stock to consider buying

I’ve been buying shares in Dr. Martens for my portfolio and I intend to continue doing so. That’s because I think it’s good value, though, not because I think a takeover might be on the cards.

I’d rather the company didn’t get taken private – while it would likely boost the share price, finding undervalued stocks is hard enough as it is. But if it happens, there won’t be much I can do about it!