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.

Rumour is that Alan Sugar is about to launch a bid.

ct. I think that was just a joke on the other side that got taken seriously by some!

my memory is that Alan Sugar is genuinely looking to retire with his son taking over ..... i woiuld also doubt very much if he would have any interest in competing with himself by getting into retail

Philip Green might step in.....he tried to buy M&S not so long ago !.

why would he want to do that?
WLW sells sweeties, not schmutter

Perhaps that's WLW's problem....not enough sparkle.....woolies should be the shop you can depend on....if I was the likes of the big retailers...I would pounce now and snap Woolworths up !.

what would you be buying?
not a lot as far as i can see especially if the portfolio is predominantly lease rather than freehold

A lot of their shops are in predominantely good situations in the high street.....of course one would have to go through the accounts to check freeholds...leaseholds, debts, etc.....but what a name !....the big guns could turn this around (I think).

I bet the Arabs buy it....like Manchester City !.

the name is worth fuck all!
the only reason to pick up high street sites at the moment is because it is now a buyer's market, so quality retailers have an even stronger hand in negotiating terms with the freeholder ..... however, as the leases will still be "live", then there will be that much less margin to argue with

Somebody with money might come in and help out.....Woolies is a well known name.....even though the shops are not doing well !.

drowning man clutching at straws?

Not in this one !.

woolworths is on the way up

something must be happening up 6 percent at the moment

To the knackers yard!

Not convinced, it's punters believing [WLW] things can only get better.
Anyone with a Medium-term timeline it might be a no-brainer....for there is plenty that can be done. I hold from a touch higher - - - - pity I wasn't braver at lower prices, but there are always limits.

The new Exec might just be prepared to do what the others won't. Personally I think they could be removed, being far to inept and fearful of doing anything than watch.

Maybe it is this hope that is prompting Buys

you could have bought SKP instead!

i went into woolies yesterday 1st time in years....and spent 5 quid......weekly turnover must have doubled surely!

no wonder sp has risen so much today as market boys will have found out of my big purchase yesterday

this share is up 7.35 percent on the day with 4,905 buyers to 3171 sellers. This is a bad day for most shares. so, why has the sp gone up this much?