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.

Not looking good a lot of money has been lost on the other side and they are well p**ted off.



REUTERS UPDATE 1-Woolworths hits new low after profit warning [HYBWMHM]

(Adds company, analyst comments, shares, detail, background)
LONDON, July 29 (Reuters) - British sweets-to-DVDs retailer Woolworths issued a profit warning, blaming a marked downturn in trading conditions, and scrapped plans to sell out of DVD publisher 2 entertain, sending its shares to a new low.

The 100-year-old group, which last month agreed to part company with Chief Executive Trevor Bish-Jones, said on Tuesday it planned to rebuild its retail business around its more profitable small and medium sized stores.

But analysts said it faced an uphill struggle.

"Woolworths trading statement is dreadful," said Panmure's Philip Dorgan. "Any talent thinking about taking the (chief executive) job will doubtless be unimpressed by the board's strategic review."

Panmure's Dorgan pencilled in a first-half loss of 75 million pounds and a break-even result for the full year, adding the group was unlikely to pay a dividend.

Chairman Richard North said plans to focus on small and medium-sized stores did not mean the group was looking to shrink or to sell off larger premises.

Woolworths recently sold four stores to supermarket group Waitrose and when asked whether more such deals could happen, North said: "Not in the next few months. But who knows?"

I'm well p====d off too!! stuck with them now long term I suppose.

Seems to me all WLW Execs could be culled, say one a year - AND no-one would notice!....but their issues are at store-level, albeit with some stock issues. I can't see staff being pleased they;re employed by the Bottom Retailler....doesn't look good on the CV...Eh?
Whatever the reasons, the Execs are too well paid and probably don't care sufficiently to do anything. After-all it has been their decisions that got us here.... remember 40p.?...LOL.

Interesting

http://new.eveningnews24.co.uk/content/News/story.aspx?brand=ENOnline&category=News&tBrand=enonline&tCategory=news&itemid=NOED09%20Aug%202008%2007%3A36%3A45%3A567

Steve Johnson appointed with super Options like he'll be really rich if the sp rises to 12p and overloaded with Gold if they reqch 20p ( pretty generous, since the Music business is worth several-times the current sp, lets's call it 15p ).
So this is a no-brainer....that only T B-J would not achieve...obviously.

Anywhay the Market has marked the sp down - Ho!- Ho!- Ho!

Did shareholders have a hand in this appointment?
Rather too generous, methinks.
What a way to run a business!
So, I think I may stop going into their stores, as of now.

The only "good-point" is that SJ was instrumental ( they say!), in turning round Focus - the DIY store. But that was some while ago....and WLW needs some drive+passion rather than "giving-away" the family silver.

Certainly it will be interesting to see what changes he announces......just a shame about the sp...does the Market dislike the deal as much as I?
EDIT 13 Aug08:- down a further 5% early trade....I note Blackdown's comment (here)....so maybe Focus "recovery" was no-more than a firesale...and any daft B****g can do that, just press the "Sell" button. The Market reaction is saying he ISN'T the person required.

Focus was sold for 1. That's probably about 50p more than Woolies is worth.

Oh dear GREAT NEWS

http://www.mcvuk.com/news/31520/EUK-takes-grip-on-channel

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/17/cnwool117.xml Malcolm Walker, the founder of the Iceland frozen food chain, has made an audacious bid approach for Woolworths, the struggling pick 'n' mix retailer, in a move that would see him return to the company that fired him 37 years ago.

A consortium headed by Walker and known to include Baugur, the Icelandic investor that holds a 10 per cent stake in Woolworths, has made a formal approach to Richard North, the retailer's chairman, about acquiring the chain's 815 stores.

The consortium, which outlined its proposal to North in a letter late last month, is interested only in Woolworths' stores. It is not interested in acquiring EUK, Woolworths Group's entertainment wholesale division, or 2 Entertain, its music and video publishing joint venture with the BBC.

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Walker is thought to have offered tens of millions of pounds for the underperforming stores division, but he is understood to be willing to proceed with the deal only if the Woolworths board agrees to retain most of the group's debt and wipe out its pension deficit. At its financial year end on February 2, Woolworths' net debt was 124m, although average debt over the year was significantly higher.

According to Woolworths' annual report, it has a pension deficit of 48.2m, but this is about to be revalued. These high figures could mean that the consortium is effectively asking Woolworths to pay it to take the stores off its hands.

Although Woolworths is known as a retailer, the real value in the company lies in EUK and 2 Entertain. Over the year to February 2, adjusted profit at the Woolworths chain was 3.4m, while adjusted profit at the other two divisions was a far larger 54.8m. Some analysts believe that splitting the underperforming stores from the wholesale and publishing divisions would allow the company to crystallise value.

Such a move would also lift the company's flagging share price, which has slumped by 71 per cent to 6.65p over the past year. Over the 25 weeks to July 26, like-for-like sales at Woolworths' stores fell by 6.7 per cent.

One executive close to the situation said: "Woolworths' retail division has a negative value and is weighing on the share price. The share price will only rise if Woolworths gets rid of its retail division."

Walker's consortium would continue to run the Woolworths chain as a going concern with Walker as chief executive. It is understood that he would also retain his stake and a board position at Iceland, where he is currently chief executive.

A source close to the deal described it as "a low-ball offer with a number of conditions attached that Woolworths may not be able to meet".

If Mr Walker thinks retail can be made to pay why can't the present Board?

Equally the obvious way to acquire retail [the hard job] would be make an offer for the company of say 50p per share the good parts would then support necessary alterations to achieve overall prosperity [ they might even win on 25p! ]

Tipton

http://www.irishnews.com/break.asp?tbrk=brk&par=brk&catid=5834&subcatid=642&storyid=373913

Easy money to be made here today

I have bought 40,000 at 7.48p. I will hang on to these for a while

city trader

Not if you paid over 8p

We musn't forget that the Debt is the Elephant in the room - so I'm inclined to revise any earlier figures.
1) We'll never see 50p again unless the shops turnabout and profits roll in. "2015...?"
2) Stores can be improved, as can staff attitude, products etc...it just a pile of do-do at present- so almost any improvement is worthwhile
3) The Big Red catalogue appears to have been forgotten - just as well, it was rubbish - presumably IF there was a focus group they had an interest in a negative outcome - how else explain it?
4) Products - some should be "that bit extra" in my opinion - if you sell "me-too" product then folk might as well go to Tesco and choose from their selection of "average" gear.
5) If the Music business has value, they'd better make use of it soon, before it loses anything - the way I see Downloads going ( and pop groups, film-DVD etc ) we may not have a "music arm" before long - BUT I don't know......however, on past facts the Execs at WLW know far less....
6) Cull 10% of WLW Execs at each AGM - so the shareholders can have some fun and focus their minds on the business. Maybe even give Staff of the Month an incentive of 1000 shares ( not sellable for 1-year).....
7) It all hinges on their recovery plan - but I object to having a Ch Exec and Chairman to pay for - why can't they each go visiting stores and buck up ideas -
8) Complacency and dullards only need apply....there, I've dared speak it.
9) so what sp?:- I think 10p is about minimum evens - it has to be worth more if any signs of a recovery are showing - so maybe 15p - with 20p-ish if things go well...then we "could get a bid" with a range 25-40p - but maybe less if it's quite soon and involves the Debt being kept on WLW books - let's suggest 12p - and WLW shareholders get stuck with maybe 6p-worth of debt, so anyone buying at 6-pence will make nothing - the Bid is 12, the debt is -6 and th sp will be negative, until it's mangled, rights etc - BUT that would remove the shops for Nothing! That can't be right!

So we need maybe 20p with the debt being -6p leaving shareholders with no shops and nop debt, just the Music business and a small profit of maybe 8p in return for all the Shops......not convinced this is a Good Deal? No, it isn't...We need the shops improved, wih better stock and better staffing, better ticketing, descriptions an helping hand...


Grr!
Up a tad today = MM's hoping for something more...Huh!

up a tad today hangon. Have you bought yours today like me?

The retail arm is virtually worthless and they don't want to sell the other bit.

They may be forced if enough support can be gathered according to todays news.

Second bid

http://business.scotsman.com/retail/Consortium-set-to-test-Woolworths39.4403737.jp

janetbennison, thanks for asking - no I bought at 8p, believing it couldn't get worse, but have been unaware of the Debt issue - now it's out that should subdue any Bidders.
I really hoped T BJ would get the Stores sorted out...it seems so simple to me...."sell the sizzle" and folk will come in and spend...at the moment they come in and spend almost nothing. Last fortnight I was there whilst three young staff watch a YL unpack a child's toy - the Q being were batteries included?...and what size/qty were needed. Do you think this was evident? - No, in the end I helped her unpack the thing and only in the Instructions was the information found.

Now if you are selling a battery-toy, how do you expect to gain shopper's respect if the toy is given to the child without batteries....what are the FIRST things the child will ask?
1) Can I open it? ( that's, "May - - ")
2)how does it work ( that's childspeak for where are the batteries!)

The child is not interested in the large barcode, or the picture, of some other child playing with their toy! Nor is a list of toy-specific advertisement slogans - utterly no use.

A picture of the number of batteries and how they fit would be nice (on the back, so even a non-toy adult gets the idea) - or, if it had a swing card..."from Woolworths with love" - and on the reverse..."batteries: Order 1pk AAA(qty 3 reqd)"....would be nice.
But you know I am getting rather bored with trying to do Execs job even slightly better than zippo. These guys earn nearly 1/4 million quid - for that price you could get twenty young graduaters(?)....It's about time they realised they need to shift some gear...and do it just slightly better would be enough.....although having the toy with the power-saving timer would help the batteries "rest", before the child flattens them permanently.

What I mean is - with their Buying power, get the deluxe version with some "extra" for similar money - up-sell and both customer/child/shareholder is happy....and customers will spread the news.....It's not rocket science!

It's just so poor, yet no-one would believe it.

the stock market falls are terrible today. I have bought woolworths and they have fallen with market today. We may still get out with a profit. Baugur will not just walk away without a fight, they do own 10 percent of the company. So it is in their interest to try to get the shops. It will be interesting to see how this develops. good luck all holders.