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.

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

I agree.

i cannot see that ANY high street stock is worth a punt, especially in the prsent climate

cynic wasn't it you that told me BLR wasn't worth a punt at 20p then it doubled?

LOL

have not changed my mind about BLR either! ...... on the other hand, i did think AL was a sound defensive banking stock too

Across the board markdowns throw up bargains, whether WLW is a bargain even at this price is debatable, but WLW t/o is exceptionally weighted towards Xmas, yes the consumer is suffering and is likely to for some time yet, but for those investors who are prepared to buy & hold there maybe reasonable profits to be had in the retail sector yet, especially those with decent yields. The time to buy is when stocks are out of favour, you can collect the divi's whilst waiting for the sp to rise. In 1991 Next were 24p.
2517

Frankly there not much around to go long on, so this is a trading opportunity and that's all.

This will be my last one for a while whatever happens.

As I go into profit I am closing positions till the dust settles.

With this one, I will take a loss if it goes wrong which I dont think it will on Wednesday.

Agree, the retail sector not one I am looking to buy at present. I have a holding of MKS that I purchased when Rose took the helm and I think I will add to that when the dust settles. The Christmas trading period could be awlful for retailers this year with perhaps low ticket sales doing better.

In for some at .20 dead seems a good price.

Hello dave, long time.........

Both in at the same time, could be an omen

I must say I quite like their Worthit label........ it could catch on imo

BUDGET LUXURY GOODS BATTLE
18/09/2007
Related Articles

Woolworths is launching cut-price caviar and perfume under its budget Worthit! label.

Following the success of its cheap bubbly at only a fiver a bottle, the chain says it is ready to take on Tesco and Asda in the shoestring brand war.

Woolworths has lost out to Tesco's Value and Asda's Smartprice budget ranges in an aggressive blitz which has seen both supermarket giants flog cheap electrical goods, booze, clothes and homewares.

But following a sellout of 3,000 bottles of Worthit! champagne in four days, it is aiming to win back shoppers with a barrage of one-off deals on top-of-the-range luxury items.

A Woolies spokesperson said: "We wanted to find out whether consumers would buy a luxury item from our budget range and the answer was a resounding yes.

"We will now be bringing out a line of goods that are normally associated with the top end of the market to widen the Worthit! label, which already has 1,000 lines on sale since its official launch two weeks ago."

http://www.mirror.co.uk/news/money/city/2007/09/18/budget-luxury-goods-battle-89520-19806683/

Afternoon,yes looks a good price to me especially when you think of the entertainment side of wlw...

Worthit or not,we will soon find out,,and may-be i will buy one of there 5.00 bottle`s of champagne there doing !

Or the caviar, which is really fish eggs but dont tell anyone.......

Picked up a few more 19.75..it gets better.

stick with the drink !