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.

choccy ..... it isn't that woolies were overpriced, it was that they did not have the stock that anyone wanted ...... though slashing their prices on their sweeties (not just any pretty till girls that may be around!) may steal a bit of extra christmas trade, i'm not convinced that the impact will be that significant

Neither am I, Mr C, in the general scheme of things.
Might just put Poundstretchers on the backfoot.

As a matter of interest, I asked several staff in John Lewis yesterday whether they'd be not be joining the pre-Christmas discount goldrush - and they remain adamant that they are still only matching discounted goods prices.
Power to them - they own the company.
They have, however, already reduced the VAT.
And they're looking pretty weary under all the cheerfulness.

i find it hard to believe that christmas sales over all are going to be any better than awful ...... virtually without exception, people i speak to, including myself of course(!), say they are cutting back on how much they will spend on pressies this year, and there can be no doubt that this will also impact summer hol plans etc in 2009.

i would expect the picture to be very much the same in usa, but there will be some indication of that in the next few days after the T'giving sales period

Cynic if you are buying electrical pressies for Xmasand by that I dont mean a torch.you can cut your expenses by 50% and still buy the same goods as last yearonly problem is the family dont want the same presents as last yearam I talking bo**ocks?

probably - lol! ...... i can't have been in woolies for 20 years or more, so don't really know what they sell anyway

That's the problem, woolies used to sell cheaply things people wanted...used to buy paint there....now : that would be the last place to go !.

They still sell paint I have seen Bottle green and Gunmetal grey.. only the other week

Yes but the wrong colours ! (meant to sound like Rowan Atkinson, " you sound fluent sir" etc,,,,,) !.

RFI am fluent at being stupidyears of practice.

I'm catching up rapidly !.

Thousands of Woolworths staff are likely to lose their jobs in Christmas week if the accountants now running the store chain cannot find a buyer for the business within the next four weeks.

Deloittes, which has been formally appointed administrator to the collapsed retailer, said yesterday it hoped to keep the 800 stores open and the staff paid until Christmas, in order to keep cash coming in and shift stock at what should be the chain's busiest time of the year. But there is no promise of jobs for the 25,000 shop staff after that date. New deliveries from suppliers are likely to cease straight away and the shelves will gradually empty.

Staff at Woolworths' headquarters in central London are likely to be the first to go, possibly in the coming days.

Yesterday Gordon Brown said the government would try to help staff. The prime minister said: "The important thing is in the long run that employees in this company - where the businesses and the shops are not going to stay open in the longer term - can get other jobs quickly." He promised to "move in immediately to give advice to employees".

A spokesman for Woolworths' administrators said they would be looking for a "suitable" buyer for the business, or for large parts of it in order to repay creditors, and had received a lot of inquiries. Woolworths owes 385m to lenders led by GMAC and Burdale.

Fancy having the headquarters in central London : there's a mistake for starts !.

don't be too harsh .... from memory, it's at the crummy end of marylebone road

It is just before the flyover in the main road. I have done consultancy there. It is about time they closed up shop.

They should have moved out years ago, anything around the Marylebone area is prime site now !.

not up by paddington it isn't

Opposite side of flyover and Edgeware Road from Paddington. Nearer to Marylebone Station and on same side.

Well it's just to say that operations should and must be conducted not from expensive residential areas....you would think that these so called executives would understand that.....it beggars belief !.

i think you are being rather unfair ...... i don't know the terms under which WLW have that site, but it is far from impossible that it made no economic sense at all to move ..... and move to where incidentally and how long ago? ..... and what do you do about the staff who do not want to move? ...... i am unsure about legislation regarding enforced relocation, but certainly be aware how incredibly expensive it is to train new staff, and that is once you haver found suitable replacements

The bottom line is of course the economics of the situation and I for one do not have all the the info about staff, freeholds, lease terms etc....but if you want to succeed : the last place for headquarters is where they are now and they should have moved 20, 30 years ago.....what are they doing there ?, prestige location ?, retrain staff....a company must be ready to change !, they did not and now they are finished. Scared of change : that is the problem with this country !.