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.

The start of the weekend press I promised you all
http://www.ft.com/cms/s/0/49e9415c-7b7a-11dd-b839-000077b07658.html?nclick_check=1

More to come on Sunday.

below is what the above link shows ...... news like yesterday's fish and chip wrapping!



Walker holds talks over Woolworths
By Tom Braithwaite

Published: September 5 2008 20:26 | Last updated: September 5 2008 20:26

Malcolm Walker, the chief executive of the Iceland supermarket chain, has met the leading shareholder in Woolworths to discuss his attempt to buy the companys stores.

Mr Walker has offered about 50m for the stores and is fronting a consortium led by Baugur, the Icelandic investment group. But the approach was last month swiftly rejected by Woolworths board, led by Richard North, chairman.

Except cynic this was news that has NOT been previously announced. Walker has spoken with woolies but NOT NAG. Which is why we shot up this morning. Keep up old boy!

Sundays independant news. Fears are now growing for woolworths. Results are out on wednesday. Sounds terrible. I am leaving this one alone now. I made a profit of my previous buy. Anyone still holding have a look at the news. Good luck.

http://www.independent.co.uk/news/business/news/fears-grow-for-future-of-woolworths-929661.html

given that it is no surprise that the figures are dreadful and that predators are already known to be sniffing, buying after the results, assuming sp falls further, may not be such a dumb call

To want to buy WLW you'd need to be sniffing something pretty potent.

Woolworths reports loss of 100m


Ailing high street chain Woolworths reported losses of almost 100 million for the six months to the start of August.

While the group generates the majority of its business in the run up to Christmas, Woolworths said the results highlighted the "operational issues and strategic challenges" faced at its retail arm.

Sales for the retail business were 660.7 million in the half-year, down 3.2% on a like-for-like basis, while the company's entertainment wholesale and publishing arm - including its BBC Worldwide joint venture 2entertain - posted flat sales of 446.3 million.

Overall group losses of 99.7 million compared with a deficit of 63.8 million a year earlier. Operating losses for the retail business, which trades from around 800 stores in the UK, were 69.5 million.

Shares in Woolworths fell another 7% on Wednesday after it warned deteriorating credit insurance markets may increase its working capital requirements. However, the group insisted it expected to operate within its existing borrowing facilities.

Seymour Pierce retail analyst Freddie George said the latest figures came in worse than expected, adding his forecast for a 2 million full-year loss was under review.

Woolworths reports loss of 100m


Ailing high street chain Woolworths reported losses of almost 100 million for the six months to the start of August.

While the group generates the majority of its business in the run up to Christmas, Woolworths said the results highlighted the "operational issues and strategic challenges" faced at its retail arm.

Sales for the retail business were 660.7 million in the half-year, down 3.2% on a like-for-like basis, while the company's entertainment wholesale and publishing arm - including its BBC Worldwide joint venture 2entertain - posted flat sales of 446.3 million.

Overall group losses of 99.7 million compared with a deficit of 63.8 million a year earlier. Operating losses for the retail business, which trades from around 800 stores in the UK, were 69.5 million.

Shares in Woolworths fell another 7% on Wednesday after it warned deteriorating credit insurance markets may increase its working capital requirements. However, the group insisted it expected to operate within its existing borrowing facilities.

Seymour Pierce retail analyst Freddie George said the latest figures came in worse than expected, adding his forecast for a 2 million full-year loss was under review.

Blimy thats 200 million -):

This is going to bring the big boys out of the woods.....takeover target at 2p ?.....Mr woolworth will be turning over in his grave and putting in a bid !.

this must be worth a buy imminently if not now ...... call the price 5p as that is easy to work with ...... buy 20,000 shares = 1000 which is the maximum you can lose ...... surely the company is worth at least 7.5p?

7.5p?
-I suspect the answer is "no".
With the current incumbents,. losses will continue - to the point where someone Big (like Banks) start to wonder if it will suck them into a black hole as well.

What is needed is a root and branch elimination of the whole Board - it is evident not one has any decent ideas - the Big Red Catalogue wasn't interesting, not Big, and the last issue wasn't Red! It was about as close to v.poor as could be done by a relativly inexperienced SmallC - - - with a company the size of WLW, it's a dire shame - but perhaps showed their incompetance.
((Note that the idea of a catalogue isn't bad - just the way they went about it, eh!")).
At the last agm the air of complacency could have been bottled, for sale to writers of many co's blurb --RNS etc.
Grr.

perhaps it wasn't red but just binned and recycled!

The retail side has a negative value = a liability. Maybe the non-retail element is worth something to another party, but I wouldn't bank on it.

WENT INTO WLW TO BUY SOMETHING CAME OUT WITH NOTHING.ITS LOST IT.

Xsteffx
What was it you wanted?

or can't you remember? ... if you had surely the sp would have improved!

I suspect we won't see any improvements in WLW at the interims - this will g'tee the new boss has a clear-run to improving things.
(and collect a performance Bonus, Ahem)
It is in his interests to root-out every dire figure and clear the decks - this will show everyone just how good he is . . . . and is a lamentable end to the previous encumbent Bish-Jones . . . . who achieved about the worst sp fall in any FTSE company. Oh dear . . . . . . and I offered him 1 from 20 ideas to improve.
He chose no #7 to price goods on both sides where they are used to create a queue. (but it was short-lived, the staff reverting to type, within weeks)
Better staff=-training, help for customers - and improved shopping experience all-round . . . . . the increased goodwill would attract footfall and profits should follow.

Today, I collected my Big Red catalogue - will read it after the Markets close, etc.