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.

Good point !, now where's the soap ?, (slip !, just stood on it !, followed by loud splash and shout ! aaaaghhh!).

New non exec director appointed ex Vodaphone.

Not only that - - - it appears he was at Kingfisher when Wollies was part of the Co.

Unsure if this heralds any change,- it was some years ago. . . . . and other Retail has moved up a Gear since.
Still, a punch-drunk monkey could "probably" do better than the present incumbents; - that is, after he's finished the first-edition of the Complete Works of Shakespeare.
(I think it is still curious there has been no mention of the Dividend - surely this is "key" to the sp - as many Retirees appear to hold this.)
I hold abt. av. 20p

Ideal time to average and then double your money as well as 15% divi!

i must shop in wollies today.

its going to be a gem

when are their next figures due?

2nd April 2008.

Halifax - thanks for the suggestion, but my av is as a result of a Buy at 8.5p - so whilst the sp shows a large increase my overall exposure is still sufficient.
This is because I'm not convinced the sp will rise 50% in the next few days like it did from 8.5p (when Directors bought modest amounts at 11p)...this is the driver "now" since the new-man is completely unknown and could be ineffective as the rest of the Board (er, clearly is!).
WLW has plenty going for it, BUT needs some very good driving, that I suspect hasn't happened yet and the lowly sp demonstrate this.
I agree the divi. is nice - but it's not G'teed - and until the shops get their turnaround any divi. is a loss of cash. Halifax, may I ask; do you go to the WLW AGM's?

No need just read the RNS at 7am on 2nd April 2008 suspect the message will be upbeat. In the meantime wonder what our Icelandic shorters are going to do?

My average 8.64, don't see the sp returning so will just hold for now. Nice to have a few blues on the portfolio and Woolies isn't bad for income either.

what is the divi going to be around any1 know,this is a hidden gem,dyor

IMHO - [WLW] is "probably" yielding 15% - but that could be cut in the short-term.
-However, the sp is historically very LOW!
It should be about 30p minimum (ie that's abt. 3x current) - which would make the Yield abt. 5%
If 30p is the minimum, expect a range between 50p and 30p as the market moves about.
-Taking an av about 42p say, that equates to a yield about 3.5% which is not unusual.

It all hangs on whether they can get some Umph into the shops. I just hope they don't sell-off the DVD-business... and run!
Woolworth is a brilliant brand - run by dullards . . . . - just look at the graph!
Are you buying?

No.

Yes definitely a buy, wait for the suprisingly good news. A lot happening behind the scenes. Results due 2nd April.

They do better to get Sir Alan Sugar or Peter Green to run this store, then it would really take off !

Euhhh, I think his name is Philip Green !

Woolies doesn't sell anything that can't buy as cheaply/more cheaply elsewhere e.g. Tescos. The retail portfolio is leasehold and high street rents are static/falling, so no value in the property - in fact, more likely to be an overall liability.

Maybe some value in the non-retail business.

With commercial property falling in value, leasing is a smart position. Tesco is comming under pressure for their Land-bank and that is falling in value.
Yes, it's true you can buy "almost everything" elsewhere, but is that the point?
They have a large foot-fall and many stores in High Street positions which Tesco doesn't.
-Perhaps that's why you have to pay nearly 20x for a Tesco share; compared with WLW?
-Also, the WLW share offers a greater yield and far greater up-side.......
However, you are sport-on as far as the "general Situation" is concerned - WLW Execs don't appear to be capable of doing even "as well" as Tesco - but that is partly because they are significantly different Capiatal-values and TESCO does do Food - which draws-in and makes the average-spend 50-100 whereas WLW is below 5.

Your comments, blackdown are true enough, but investment is about buying "before" the situation changes - I'm hoping it does change....and sooner the better.

Maybe you can suggest some minor changes that would have great effect?

exactly many critics, most of whom unlike you and I Hangon are not holders why don't they come up with sensible suggestions as it is apparently so easy to do, while the heavily condemned management are given no credit for the BBc deal or did that happen magically.