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.

Breifly...The July figures from the British Retail Consortium (BRC) were particularly gloomy indeed - in fact it was the worst July performance since 1995. Like-for-like sales skidded by 1.9% year-on-year. A consensus view stood at a 1% fall and it was even gloomier than the 1.5% fall trailed in The Observer over the weekend. However, the London bomb attacks were not cited as a reason for the fall, with the weather and the Live 8 concert taking the blame. Seymour Pierce notes that the BRC continues to push for another rate cut. The broker thought it had a 50/50 chance of receiving one before the year end, but it still wondered just how much of a positive impact this would actually have on trade. It maintained its sector weighting at "underweight." Evolution's retail guru Nick Bubb said that he still saw scope for disappointment with the expected autumn high street recovery, beginning with the key "back to school" period and said he would still be wary of the weaker situations in the sector. Bubb also pointed out that that the August BRC survey will come out on September 5th - just before Dixons' AGM on September 7th and the Monetary Policy Committee vote on September 8th. However, Bubb said he though any further rate cut was unlikely before November. Shares in Boots fell 2p to 595p, GUS stock lost 5p to 904p and Kingfisher shares fell 1.25p to 245.75p.

If anybody sees any news over the wkend regarding Woolworths in the UK press do post - Many Thanks.

Back Monday.

Girls' school trousers have out-sold school skirts this year for the first time.

Sales of school skirts have plunged by 51 per cent in three years while school trousers have enjoyed a surge in popularity.

Girls are choosing trousers because they are more practical than skirts and now come in fashionable styles, analysis by Woolworths indicates.

Just three years ago the store's sales of skirts and trousers in its primary and secondary ranges stood at 98 per cent and 2 per cent respectively. This year, trouser sales rose to 52 per cent. Rhian Jones, Woolworths' schoolwear buyer, said girls were choosing trousers because they are more stylish and practical. "If the decline continues at its current pace, skirts could be a thing of the past in schools by 2017," she said. "Trousers are more practical because they are suitable for all weather and, at schools with a large mix of cultures, trousers are almost universal dress."

Taken from a news article:http://uk.biz.yahoo.com/050801/94/fomh6.html

Since the high street retailer announced the sale of MVC, its loss making video and dvd business for for 5.5m. Woolworths said the disposal would create an exceptional loss of around 34m in the half year to July 30.
News of the disposal has raised expectations that Woolworths would become a bid target again.

Always the Bid rumours surrounding the stock are lurking once again and heavier volumes of shares are being traded. With christamas just months away woolies seems to be wellpositioned.


Thanks to its Strong Cash generative position
Net Cash Position
Restructuring: Significant sales but low margins.

Assumming that management can get it right and they have been doing so the upside is considerable. On a PER of 13.3x falling to 11.6x and with a yield of 3.4% the shares are certainly worth looking at again.

At present Woolworths is highly undervalued - The charts reveal that 40-44p should be currents value, even in the current climate though a predators bid for the company would further add value, thus increase the Woolworths share price to nearer 58-60p.

The price of woolworths at present is at :36p an increase of 75% looks likely from the current price if a bid materialies - now thats no small change.

Good Luck to all who hold for that day. - An approach soon we alll hope.

Not long to go :

Expect Woolworrths to report results update on 3rd quarter on 21st Sept.

Thanks to its Strong Cash generative position and Net Cash Position, expected profits for year this year could be arounnd the 50m Sterling according to analysts forecasts.

At the current levels of sp -36p, good ole woolies is a bargain to be had as the upside potential is excellent, especially if a bid is followed through, when it happens, it will no doubt gallop again. as it did 6 months back, Luckily I was right back then, but didnt expect Apax to back down like they had.

Good Luckfor the weeks ahead.

Any Holders out there?

(DYOR as always)

Hello Jules.

I have been channel trading this for a few weeks now and currently I do hold.

As I stated before, I am very grateful for all of your research.

"Woolworths is set to become the latest retailer to report a slump in sales this week"

Holders need balls of steel this week................

(Currently out sold friday.)

Anybody fancy some pick & mix,,,,,,,,,,,oh no its melting.

The sp is looking more attractive the more it falls.

Ahead of Wednesday's interim results statement from Woolworths, Evolution's retail guru Nick Bubb said that he thought recovery hopes seemed to be fading. The broker said he thought that first-half losses would be much higher. He forecasted pre-tax losses of 41 million pounds on UK GAAP, compared with a 33-million-pound loss last year, on the back of 4.5% fall in like-for-like sales in the main chain and said that Woolworths needed a big second-half recovery to get anywhere near last year's disappointing 73-million-pounds full-year profits. Bubb said that the hope was that toy sales would recover this autumn and that new releases would boost music/DVD sales, but said that there was always something going wrong at Woolies. He now also thinks that like-for-like sales may be down by 2.5%, rather than its current assumption of flat like-for-like sales growth, given worsening high street trading. The broker therefore cut his full-year pre-tax profits forecast from 60 million pounds to 50 million pounds. Bubb maintained his "reduce" stance, but cut his target to 30p from 32.5p. The shares fell 0.25p to 35p.

Well that above plus weekend coverage has made my mind up.

Betting = The wager of money or moneys worth on the event of a doubtful issue.

I stay out till I know where it goes next.

Going the right way for me SW,but no hurry at the moment..

33.5p mid as I write, from I am seeing elsewhere, players expect sub 30p after tomorrow, the forscast of 4% drop is going on 5% apparently

You guys should forget about Woolies and pile into Avis
Its looking good on all fronts for 70p within the next few weeks or earlier

Is that right Dave?

Good luck holders for tomorrow.

Woolworths Wilts

"Woolworths Group PLC, the toys-to-sweets retailer that was jilted by Apax Partners in April, has reported an expected widening of underlying first half losses but an improvement in recent underlying sales at its eponymous main chain."

I think the figures are actually not so bad.

Wait and see what happens with the sp.

Morning SW

Hey ello.........