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.
(Article continued below)
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.

2 for 1 on the pick & mix,i bet.

1032 GMT [Dow Jones] Woolworths (WLW.LN) +1.6% at 31.75p in heavy volume on speculation Iceland's Baugur (BAUGUR.YY) may be building a stake, say traders. One says the speculation is old but is given some support by the fact around 4x the average daily volume was recorded by 1000 GMT. But another feels the buying is coming from another source. Baugur decline to comment. (DWE)

Since 26 Jan 06 there has been a
WLW Trading vol of around 700m
The Co has new owners !

Jus called in to say Hi.

Not bought any, but I see Baugar now has 10.2%..........

Any views?

I ask as I held BFG tlil I was robbed blind by Baugar.

Good to see some recovery in the sp, but is it time to sell not buy, and I am not deramping, I am asking.....

Well what do you make of this one ?

Sales down/divi up,,i guess they fear a mass sell off,,hold for the divi at your peril..

Dave I could be wrong, but when Apax made the approach, that was just pre divi time, and I believe it was withheld, so I suspect it has been accumulating interest in the bank, and they are paying it now.

If that is right, they are playing with the same money, if I am wrong, there are enough educated posters on this thread to clarify matters.

In the mean time, I am now looking to buy in below 30 pence once this goes ex divi.

Baugaur are still accumlating, they have over 10% but we know from Big Food days that they will steal the company if they buy it, with little or no premium, hence my low target.

Been away from retail for a while, and I would welcome an up turn across the whole high street now.

Almost two months later and T/O prospects don't look likely in the near future.
I hope to go to the AGM and ask two questions that have always puzzled me:
1) when i search the shelves for the ideal product, the one I choose is missing the price-tag
2) Why are their plants dying in-season? Does no-one have the responsibility to keep them watered - or do they need to invest in a gravel-tray that keept the roots moist? My local store was selling off 3 stock at 1 - but they were dead - so a small pot at 1 was bad value. When you consider the total work involved in moving the stock from supplier to bin I guess almost any watering system would repay itself quite quickly - however I have an idea and I'll see what Management thinks of it - often a way to determine the ability of Management to react to market changes (the watering problem has persisted for 20 years IMHO).
I have a small holding

Hangon,

I know what you mean about stock problems,i have been trying to get some merlin world cup football stickers from Woolworths for my son on the promise they will be in tomorrow,well that was 7 days ago,and guess what ,yes there in today ,i was lucky she said there going like hot cakes,,dont i know it, so i bought a box of 100 packets at 35.00,my lad is getting 10 packs a day thats all so that gives me time to find another box.

Baugar show their hand............

http://www.moneyam.com/action/news/showArticle?id=1487492

Woolworths target for store break-up - report
AFX


LONDON (AFX) - Woolworths Group PLC, the high street retailer, could be broken up under a takeover plan devised by one of its biggest shareholders, Baugur, the acquisitive Icelandic group, The Financial Times reported without citing sources.

The Icelanders plan to cut dramatically the size of the 96-year-old chain, which has 800 stores in most cities and towns, the newspaper said. Baugur also wants to pass on a large number of the stores to a leading supermarket chain such as Asda, according to the FT.

Baugur is understood to have calculated that most of the finance needed for a takeover of the 500 mln stg company could be raised by separating out Woolworth's two entertainment businesses, which it values at more than 350 mln stg, the FT added

Bauger do not pay much premiium if at all, should they manage to aquire imo.

Remember Big Food Group?

http://www.moneyam.com/action/news/showArticle?id=1487492

Interesting take in the FT (no link, sorry) that by selling-off these parts of WLW the business becomes worthless - in effect these businesses (1=media, 2=Distribution, 3=shops)....are only just holding together as it is - by removing the non-core Bauger may find there is nothing in the core.
I hold and think it needs someone with some imagination to rescue this retailler - the bid may win, but there is an alternative to break-up - form a really powerful business which folk want to go into and spend.

The average spend in WLW is fairly small and few people will admit to going there "first" - many of the shops lack parking and few are owned, so they suffer from High Street rentals and no customer (or delivery) facilities like TEsco, Morrisons etc who have vast acreages for deliveries and customer car-parking.
I guess WLW has been badly handled for 20-years and certainly the last five - but maybe the best thing for all involved is to pinch out the good bits and go home.

What are the non-shop bits worth?
I suspect we could see about the current price valuation on "each" and if the shops were a little better they would be worth nearly the same, so a tad under 1 all-in............but "now" is the wrong time for a bidder - the second half (near Xmas) is always their most profitable....
I attended the agm and I'm not impressed by the Management... beautifully crafted speeches, but no change since, it's as though "everything" was OK.........perhaps they are overpaid.

Retailer Woolworths Group reported a 6.5% fall in overall like-for-like sales for the 18 weeks to December 2nd.

The group said it needs an uplift in Christmas sales and continued margin improvement to meet the lower end of market expectations for the year.

Sales of seasonal Christmas products have been slow, the company said in a trading statement.

Woolworths said margins for the second half to date were 150 basis points ahead of last year.

The company also said retail prices for its entertainment operations were materially below last year but sales of toys were strong.

http://www.moneyam.com/action/news/showArticle?id=1647636

I thought this was turning round,well i never more negative statements from the bishop..

Hello dave - how are you.

Long time........

MorningSW

Good to see you, I hope you are not holding that oiler any more?

Did you get the email

Just reading it now.

UK shopper numbers down 11.4 pct year-on-year last weekend - Footfall
AFX


LONDON (AFX) - UK shopper numbers last weekend (Dec 16 and 17) were down 11.4 pct year-on-year but were up 4.4 pct on the previous week, according to Footfall, the Experian-owned retail analysis company.

It said that with an extra weekend this year to pack in Christmas shopping, retailers are hoping more shoppers will be rushing to stores to get last minute gifts.

'This year, even the biggest reductions have done little to entice consumers back to the high street,' noted Natasha Burton, marketing manager.

'Sales have been bigger and better than ever yet we are recording significantly less numbers of people shopping. Consumers have been playing a waiting game and it has paid off.'

The data adds weight to those who argue Christmas 2006 will be poor for most retailers.

Last month Richard Ratner, retail analyst at Seymour Pierce, predicted that this Christmas could be the worst for UK retailers for 25 years. On Dec 5 Woolworths Group PLC, the variety store retailer, issued a profit warning and last week Debenhams PLC, the UK's second-largest department store group, published very subdued trading figures.

However, some retailers are trading well. Weekly data from the John Lewis Partnership, the employee-owned retailer, indicate its department stores and Waitrose supermarket chain are winning market share, while Marks & Spencer Group PLC is also believed to be outperforming.

Footfall will publish data for the full week to Dec 17 tomorrow.

Great trading opportunity from here IMO