Yesterday evening, Bloomberg published an article titled “Colgate Takeover Odds Rise Amid Megamergers: Real M&A” (http://bloom.bg/1sni5Je) which caught our attention. Analyst quotes in the article supported the view of Colgate as an attractive takeover target, with statements promoting CL’s favorable “emerging-market exposure”, “fantastic distribution system”, and “room to increase leverage”. 
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At a price of $65.40, StockPointer lists Colgate-Palmolive at a premium of 20-30% relative to its intrinsic value. CL has been trading at that premium for slightly over a year and a half. While its return on capital has been trending downward slightly over the years, its future growth value (FGV) has continued to grow. Ceteris paribus, CL would require NOPAT growth of 57% for its current operating value (COV) to reach the current market value of total capital. This figure would be lower were Colgate to increase its leverage. This gives you an idea of the synergies and growth necessitated by a potential suitor of Colgate-Palmolive for the acquisition to be viable, especially since the offer would have to come at a higher price.
