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.

How much debt are we talking about here ?, I can hardy think that Sir Alan Sugar is going to lose a couple of million pounds just like that !, he might step in himself !, if not he must be mighty worried at the moment !.

If they fall 50% they might be worth a gamble .. I would not worry about Sugar he can look after himself.

((mitzy - I wonder if we aren't being "shaken"))
required field: -I thought Sir Alan Sugar hadn't completed the share-purchase, due to some problem with the previous ownership (Iceland?).
+Anyone with half an ounce can see that Woolworths is a fabulous business - it needs very little change to move it from dire to delight.
In its eary days W was an innovator - yet now it barely manages to mirror what is sold elsewhere.
On BBC2(WorkingLunch), there is a current "hate W" campaign with only one decent suggestion:- that they conmcentrate On-Line and use the shops as collection points....sound enough one might think, but any HiStreet position is expensivve...as a pure collection point, why not use the local Railway Station?
(This pre-supposes shoppers have access to the rail - but increasingly this includes bus). Could shoppers be persuaded to "view" on-line - I really doubt it...the BigRed catalogue hasn't been very successful (or they aren't saying so!)...so I suspect it is not like seeing the goods. If they sold "Gadgets" (ie Only) then their customers would be "Techy" and quite like On-Line....but looking at their customers I don't think so.
They need to sack half the Board and get in some folk with Ideas, Fire and Passion.
As it is they are "sleepers" - just look at the sp - - - - Arrgh!

(If he was there, I'd do any job for nothing...just think of the experience as it changes....Wonderful!)

poorly slected products apart, WLW apparently does not own any of its own properties, so what would one be buying?

For Woolworths to recover...some changes are needed....if you are an outsider looking to buy a stake : you have to have access to all the business ...the freeholds, the leases, the debts, the other part of woolworths business arms, everything, the losses per shop, or gains, staff, pensions, capital , the lot,....add it all up and come up with an answer : is this going into administration or not ?...very difficult for a small investor to guess what is happening !.

which bit of "does not own any of its own properties" did you not register? .... however, this may be worth a punt if sp falls much lower, as the spread is tiny and the odds of someone picking up the pieces at a premium to the prevailing sp cannot be over-long

Worth a punt sub 1p imo as a speculative buy.

seconded

I think WLW owns the freehold in marylebone road (headquarters London), not sure about that though !.....it must have at least one freehold somewhere....have not checked !.

And down the sp goes !.

Would their lending bankers gain anything by putting them into administration before Christmas?

IF they own any freehold(s) it will be very few, however they might sell-on the lease, I understand - hence the sale of some 3,4 London stores. Ovbiously these are "key sites" so it is a short-term cash-gain.
Anyone buying the business still has to consider the Debt (huge!), the Pensions(!) and stock in hand. The leases are also an enduring debt(cost) on the business.

Anyone buying the company (ie a 100% loss to shareholders) doesn't remove the fundamental issues....it stares you in the shops...plenty of foot-fall. but far too-low
a cash-per. Such a change in ownership is bound to create a lot of ill-feeling and might be sufficient in itself to destroy it, even before their new-plans have touched the paper.

why would you want to buy the leases when thet are prob overpriced in today's market?

I m taking a long hard look at these with a view to buy @.8p.

Incredible to think HSBC had a 16 p price target this February but what do they know.

Are their lending bankers about to "pull the rug"?

halifax FWIW - I hope NOT! - with large debts it is in the Bank's interest to keep the debt on their Books - it's only small businesses where landers squeeze the owner, reposess the house etc....because they can.
If the Banks closed WLW, just what would they get? . . . . Very little
....by far the best solution is to get someone like Sir Alan to - - sort out the execs, if they were paid by Results, they'd be selling the BigIssue!
+The new Mr Fixit is on a huge Bonus and hasn't even had the decency to send me a Shop Early For Christmas card.....there's an idea, for free!

Freefall..!

Has now fallen 70% since Monday..

it has fallen 0.84p this morning = 40% .... currently 1.23/1.28

The Landlords will suffer if this folds now.

I lost in WLW following Sir Alan Sugar's purchase, but I guess he makes mistakes too...



Woolworths slide over 14 percent as concerns mount up

regarding the troubled retailer's future, with Altium Securities cutting its

rating to 'sell' from 'buy' on the grounds that the firm won't find a buyer.

In a note, Altium highlights that Friday's Daily Telegraph indicates

Woolworths lenders are baulking at a rescue plan, refusing to sign up to a deal,

while the Times reports that Woolworths' largest shareholder is opposed to a

cheap deal.