An M&A boom is reshaping the ASX: 9 rebalance changes to watch

There's no shortage of M&A activity among S&P/ASX 200 companies right now – in the past week alone we've seen Bapcor (ASX: BAP) receive a bid from Bain Capital as well as Alcoa cleared a series of transaction milestones for its acquisition Alumina (ASX: AWC) and Saint-Gobain's received approval from Australia's Foreign Investment Review Board for CSR (ASX: CSR).

The removal of CSR and Silver Lake (ASX: SLR) from the ASX 200 will result in a few subtle changes to the Index. We'll explore some of them below.

Silver Lake out, Deep Yellow in

Uranium developer Deep Yellow (ASX: DYL) replaced Silver Lake effective at the close of trading on Friday, 7 June. This announcement was made on Friday, 31 May.

"We estimate DYL index weight upon inclusion to be ~5.5bps within the 200, with estimated passive demand of A$56.6 million in value to trade from index trackers that follow the 200," Morgan Stanley analysts said in a note dated 3 June.

The $56.6 million figure translates to approximately 8.2 days worth of daily average volume.

Interestingly, the inclusion attracted little outperformance between 3 and 6 June, with the stock down 7.3% and underperforming peers like Paladin Energy and a benchmark like the Global X Uranium ETF, which fell a respective 3.1% and 5.2% over the same time frame.

CSR out, Judo Capital in

Judo Capital (ASX: JDO) is set to join the ASX 200, effective at the close of trading on Wednesday, 19 June. The change remains subject to final court and shareholder approvals of Saint-Gobain's acquisition of CSR.

Morgan Stanley estimates passive demand of $46.4 million from index traders or approximately 30.1 days worth of volume.

The announcement on Wednesday resulted in a sharp spike in Judo's share price. A few notable data points include:

• Open: +1.5% to $1.32

• Session high: +9.6% to $1.425

• Close: +3.85% to $1.35

• Volume: 26.5 million or 798% higher than its 20-day average volume

More changes to come

The S&P Dow Jones Indices has announced a number of changes across the S&P/ASX Index hierarchy, including:

ASX 20

• In: James Hardie (ASX: JHX)

• Out: South32 (ASX: S32)

ASX 50

• In: Wisetech Global (ASX: WTC)

• Out: Endeavour Group (ASX: EDV)

ASX 100

• In: Paladin Energy (ASX: PDN) and Viva Energy (ASX: VEA)

• Out: Liontown (ASX: LTR) and Nine Entertainment (ASX: NEC)

There were no changes within the ASX 200 and the above will be implemented as of Friday, 21 June close.

M&A activity to watch

To top things off, there are a few more announced takeovers that will impact ASX indices in the coming months.

APM Human Services (ASX: APM) has received a bid from Madison Dearborn Partners at $1.45 per share. The final terms and timetable has yet to be announced. APM is currently a member of the ASX 300 Index.

Altium (ASX: ALU) received a $68.50 bid from Japanese semiconductor company Renesas Electronics back in February. The bid represented a 33.6% premium to Altium's last closing price and a 30.9% premium to its all-time high. Final terms and timetable are yet to be announced. Altium is currently a member of both the ASX 100, 200 and 300 indices.

Alumina (ASX: AWC) is set to be acquired by long-standing joint venture partner Aloca in an all-script deal. Aloca recently cleared several key milestones with the SEC, Brazil's Administrative Council for Economic Defence and AISC. The deal is likely to be complete in the third quarter of 2024. Alumina is currently a member of the ASX 200 and 300 indices.

MMA Offshore (ASX: MRM) received a $1 billion takeover bid from Cyan Renewables in late March. The scheme is currently pending shareholder approval and regulatory approvals. MRM is a member of the ASX 300 index.

There are several candidates that could enter the ASX 200 based off recent share price performances. A few names that come to mind include Mader Group (ASX: MAD), Nick Scali (ASX: NCK), Regis Healthcare (ASX: REG) and Clarity Pharmaceuticals (ASX: CU6).