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.

Should be a good day tomorrow here,sleep well.

The Fed rate cut should do us a bit of good imo.

Half-Year Results Announcement

Financial Performance


Half-year adjusted loss 59.2 million against 66.8 million last year

Loss before taxation pre exceptional from continuing operations 64.7 million
compared with 73.6 million in the prior year

First half Group sales from continuing operations up 16.1 per cent in the 26
weeks to 4 August 2007

Woolworths half-year like-for-like sales up 0.6 per cent

Interim Dividend remains at 0.43 pence per share




Operational Highlights


Woolworths launch of Worth It! range and Big Red Book II

Retail gross margin improved by 110 basis points

EUK secures contract to supply Entertainment ranges to ASDA

Acquisition of Bertram Group cleared by Competition Commission




Trevor Bish-Jones, Chief Executive of Woolworths Group plc, said:

'Our first half performance is encouraging. The major contributor to the
improved performance was the retail business, but we have made progress across
all parts of the Group. Going forward, we remain cautious about the retail
environment going into the important second half - so are continuing to run the
business tightly, with a focus on cash, cost control and margins.'

The Company's Half-Year Report for the 26 weeks to 4 August 2007 is published
today on its website: www.woolworthsgroupplc.com

I am not too unhappy, Bish wants to be bullish but holds back a little, now lets see what happens today.

I thought it would be better than that,,confused from wales..

Depends what you were looking for.

There is always a loss this time of year, they have narrowed it from last year.

That's good.

"Woolworths Group has this morning reported an expected narrowing of first half losses.

The troubled sweets, CDs and stationery retailer said numbers were driven by improved sales and margins.

However, it became the latest player in the sector to issue cautious comments on the outlook for consumer spending.

'Going forward, we remain cautious about the retail environment going into the important second half, so are continuing to run the business tightly, with a focus on cash, cost control and margins,' said chief executive Trevor Bish-Jones.

For the 26 weeks to August 4th 2007 the 98-year old group made a first half underlying loss before tax and exceptional items of 59.2m versus a loss of 66.8m last time.

Group sales from continuing operations increased 16.1%.

Within this like-for-like sales in the 818-store retail chain were up 0.6%, while retail gross margin improved 110 basis points.

The first half is a relatively unimportant period for Woolworths with the bulk of its sales and profit made in the run-up to Christmas.

The interim dividend was maintained at 0.43p.

Chief executive Trevor Bish-Jones said in July he was comfortable with analysts' year to end-January 2008 underlying pretax profit forecasts of about 27m, up from 22m last time.

Baugur, through the Unity Investments vehicle, which groups Baugur with fellow Icelandic investor FL Group HF and retail entrepreneur Kevin Stanford, holds a 12.2% stake in Woolworths. It has been linked with a possible break-up bid or push for restructuring.

Its going to be a good day.

That's all I want one good day.

I won't hold this too long.

It's not going to plan.......

Never does with this old duffer,seems like the good old days of trading between 28/36 are long gone,,great divi so am holding.

Yield on my calculator shows 8.17%.

I have sold for a tiny profit today but will be back.

Looking a touch stronger now,glad i bought in .

i'm also confused and liv in wales. Following you boys as a newcomer. sp looks good and buying on the yield, cant fail can I ? Have siogned up for woolies on line for cheap offers as well. will follow your comments with eagerness. - pete in wales

Though your name was John Pete..........

Confused of Essex.

Oh well its held its own today,order book looks better,remember it it woolworths after all..

!!

Seriously if you are prepared to LTBH. then this could be a recovery.

To me Trevor Bish Jones is ringing all the right bells, and getting a few correct whizzers and pops as a result.

The Worth it Range looks to be a greatidea and they are moving with the times in respct of covering their position in the DVD and CD market by bringing forward digial downloads.

It can work and work well, if the crowds go back to Woolworths.

I may have taken my few quid, but it's only becuase there was another opportunity I wanted to follow up on.

That means I will be back especially if I can get back in below 20pence.

There I sound optimistic, because I was when I read the Interims.

You must make your investment decisions on you own research though, and not depend on us "Old Boys" because we probably know as much or less than you.

As I thought, not enough up yesterday first thing and a pull back today.

Pull back starting to gather momentum.

6%+ as I write.

Dont know why.

Dresdner Kleinwort hiked its rating to 'hold' from 'reduce' in reaction to yestrdays results. In comment Dresdner Kleinwort noted Woolworths' headline adjusted first half figures benefited from some 'one-offs' suggesting the underlying profit performance in its Retail division was not as improved as first appears. However, the broker added, re-organisation costs were incurred at its EUK business, some of which have not been taken as exceptionals, deflating the performance. Dresdner Kleinwort said the tone of Woolworth's outlook statement is cautiously positive, showing significant operational improvement combined with a strong market for its Entertainment division providing optimism for Christmas trading. The broker noted Woolworth shares have underperformed the sector by 13% over the past three months. Dresdner Kleinwort added that, while Woolworth's seasonal and operational gearing remains high, the broker sees limited downside from these levels ahead of the January trading update hence its upgrade to 'hold'. The broker said it has trimmed its target to 22 pence from 23.