takeover bid strategy - a very interesting read...

Should you chase the takeover targets?
In 2004 it seemed that every second high-profile firm around the world was either taking a firm over or being taken over itself. In the US, Cingular bought AT&T Wireless, for example, and, in the UK, Banco Santander bought Abbey National, and the on-off saga of Marks & Spencer (M&S) occupied column inches for weeks on end. But according to the investment bankers, we havent seen anything yet. Theres no reason to doubt their prediction. As John Plender points out in the FT, they know at first hand what is in the merger and acquisition (M&A) pipeline. And if they are right, its excellent news for investors: share prices tend to soar when bids are announced.

Take the case of Aggregate Industries. Three months ago, Sandy Cross of Williams de Broe tipped the building materials firm in MoneyWeek at 95p, saying that it looked a manageable size for a predator. He was right. This week, Switzerlands Holcim said it intends to bid $1.78bn or 138p a share for Aggregate Industries. Today, the shares are trading at around 145p - anyone who bought in November is sitting on a 53% gain.

So if this really is the start of the year of the deal, wheres the best place for investors to place their bets? There is scope for consolidation in all sorts of sectors, from telecoms equipment to travel, all over Europe, but in the UK it is the retail sector that is getting all the attention. Analysts have long been warning that British retailers were going to have a nasty end to 2004 and a worse beginning to 2005, and Christmas seems to have been every bit as poor as the pessimists feared, says Chris Brown-Humes, also in the FT. Higher interest rates, a weak housing market, record levels of personal debt, higher utility bills and increased public transport costs are all squeezing the ability and desire of households to keep spending. The result? A lot of our retailers are suffering and that could make them easy pickings for predators. Indeed, one of the only things supporting retailers share prices right now is the prospect of takeover activity.
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Venture capitalists are still on the prowl, as is the Icelandic retailer Baugur, and Tesco and Asda might make a move on a rival. All of which leaves investors simply having to guess who the targets will be.

Betting on who they might be has become the latest City investment craze, says Simon Nixon on www.Breakingviews.com. But it isnt hard. M&S and JJB Sports saw their share prices rise even as they announced rubbish numbers as investors calculated this increased the likelihood of a takeover. Perhaps Philip Green will comes back and have another go at M&S.

Other possible targets include J Sainsbury, N Brown, MFI, Matalan and French Connection. But is betting on these firms wise? Debt is now cheap and plentiful, so potential bidders are awash with cash, but if the spending downturn gathers pace, that will change and takeovers will suddenly be harder to finance. And not all the dogs of the retail sector will be rescued by a bid. Some will just go bust instead. As Simon Watkins points out in The Mail on Sunday, some already have. Since Christmas, Scottish carpet maker Stoddard International has gone into administration because of tough trading at its key customer Allied Carpets, and fashion chain Pilot went into receivership as sales fell. These were both private companies, but the lesson is clear. If you are chasing takeover targets, make sure you go for firms that will survive even if they are forced to go it alone.

Woolworths is every inch a major takeover and worth following, a great opportunity if it materialises, the time is ripe once again -58p was recent target price.
remember Doing your research reaps rewards.

Sad ;-)

Enough of this gloom the experts tell us we are all broke even our houses are almost worhtless, well mine is very cosy with the rain beating against the window and W still pay a very handsome dividend ... Citi bank have not exactly covered themselves with glory, perhaps they should put someone on a plane to look at my grocers' [Tesco] operation up 7.6% in the 3 months to 24th November.

Listening to experts is a sure way to loose your shirt.

Definition of an expert " A drip under pressure "!

Here here Halifax......

I will buy betwen 8p and 12p it will be well worth it..

Mitzy going bust ! had you thought of an evening class otherwise you will continue to look at SE prices daily with complete puzzlement ... why 8p surely a better price for woolies would be 6p?

Still holding mmg mitzy?



Is it time to buy there or are they going bust?

I paid 6p for MMG ... !


caramba..

Poo Bear its Woolworths are going bust whos going to bail them out.. you..?

Can't see any reason why Woolworths in the near future would be going bust Mitzy...!! Short term creditors should be easily covered by current assets and long term creditors I also feel have the relevant cover. Further to this I see no reason why Woolworths would be able to raise loans or additional capital, after all this big brand is far more secure then many smaller businesses in the same declining situation.

Well the fixed assets ought to be worth something explosive and the name of Woolies for that matter but when their net tangible asset value is roughly 12p you can see where Citibank are coming from.
I cant see Bauger taking them on as I read they have lost $100 mills recently so who else would be interested..?

There are still plenty of options I think, Woolworths stores are typically large and sit on decent high street positions. Loss making departments could always be replaced with others in much the same way as Alders/Debenhams have franchises operating eithin them. This could possibly complement the range of goods available within a typical store and could well lead to increased sales and revenue if Woolies were to lease out certain areas of their stores.

Very spiteful mitzy.

I asked you a question you go off the deep end............

You did not have to defend yourself as I was not attacking you nor did you have try an offensive because I can't be bothered.

I will repeat my question so that there is no mistake, are you still holding mmg? and you told me that was all I wanted to know.

Now what was wrong with that?

Yes I still hold MMG and yes I bought at 6p and was 50 bagger when it went to 300p if you look back its all there I dont tell lies so why do you think I'm lying..?

mitzy - Chill out

I don't care if you are lying and I cant be arsed to do diligence over what you do or do not do.

I asked you a simple question which you have already answered.

An apology for being spiteful would not go amiss then we can all be friends again.

NO problem Poo but I guess you know I dont like Woolworths .
Leave it at that.

Thanks mitzy, we will close this then.

Regards

cheers poo.

WLW up a bit on News Directors have bought sub-1k-worth - do MM's think we're mad?

[[ +I have been following Character Group that has suffered a double whammy - 1) Toy-Sector under pressure 2) some toy parts were found to be toxic. Oh dear!.]]

However, WLW hasn't said the Dividend is under review - but this would make a large dent in the sp...and it's not "all-toys"
So, on the basis the Dividend is OK; the return is abt 11% ( reflects the "risk" ).
I find WLW Execs almost impossible to reconcile - highly paid and little performance.
Still, any improvement has to be good news....but with Xmas "Sales" about to start (before the 25th!), we may see some softening of seasonal-profits.
WLW is a great cash-generator, but what shareholders want to see is an improvement in the Spend/Head.....currently it's quite low.

I'm not convinced that In-Store franchises(Explosive's suggestion), would work (at Woolies) - most stores that have done this are quite large and the franchise takes an "island" complete with till and somewhere to hold stock. I don't think the average WLW store is large enough and it would require a complete re-think regarding layout. I have a feeling that WLW should address the Local-produce area - ie Veg. grown locally. It might need a smart-weigher so the customer's choice is weighed and priced, ready to be paid at the "common till".

12.5p now