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.

sub 3p for the only time.

Alan Sugar has 4%.

If ( Big IF) AS was to bring Apprentice-style management to Book, he'd sack the lot! But I suspect he won't . . . and WLW will continue being rather dull on the Hi. Street.

One of the big boys has now stepped in !....interesting....very interesting !.

Sugar is no mug he knows something, bet one of his Jewish hedge fund brothers has given him a tip.


LONDON (ShareCast) - Computer millionaire and TV star Sir Alan Sugar thinks Woolworths (Munich: 886853 - news) is worth a punt having just (Advertisement)

snapped up almost 4% of the battered high street retailer.

The tough-talking host of the BBC's The Apprentice bought his 3.88% interest following a plunge in the share price to just 3.14p from over 21p less than a year ago.

Experts said the move demonstrates that some of these bombed out stocks are starting to represent value despite the likelihood of a recession.

Woolies has also agreed to sell nine of its shops to Tesco (LSE: TSCO.L - news) over the next six months for as much as 9m in cash. The money will help reduce debt.

It expects to pocket a profit of about 7m if all nine leases are transferred, which will be disclosed as part of the operating profit from property transactions. Their net asset value is around 1m.

The company denied last month that it had put its retail arm up for sale despite a record interim loss after a poor first half at the division.

It posted a deficit of 99.7m in the half year to end July, up from 63.8m. Sales fell 3% to 1.1bn. The group also cautioned that deterioration in the credit insurance market may increase the group's working capital requirements.

I don't think the store sales to TSCO as Clubman3509 mentions is anything like enough.
The Dept is reduced, but leaves a further 90m - and maybe there is more (I'm taking his figure). I thought WLW debt was far higher, but eeven this Deal is only a brief respite . . . . now, what about the 90m . . . .can't sell all their stores, can they?

Why not they still have 800 more to sell.

come onyou know that Tesco (or Waitrose who bought in N.London) are only interested in the best-sites . . . so WLW is deluding their shareholders that "these are surplus to requirements" . . . etc. or whatever hogwash
EDIT
You say:Are you suggesting WLW's directors are deceiving their shareholders? An orderly disposal of some surplus leaseholds is far better than a wholsale firesale.
Not yet have I heard anything, but the real source of the "problem" is the stores and lack of excitement - give each store a real salesman (wmn), and turnover would increase . . . having "low-prices" makes a lot of work, for little return. So they need to improve their selling technique...surely you ccan't disagree with sorting out the fundamentals? People still go in, but they aren't spending enough...in probability more on "Lottery tickets" than on "goods". . . and . . . . how is it these are "surplus . . . did consumers move the town? most WLW stores have no car-parking facilities....(EDIT ends)

Are you suggesting WLW's directors are deceiving their shareholders? An orderly disposal of some surplus leaseholds is far better than a wholsale firesale.

Watch Sainsbury tomorrow could be news on Baugers stake there which may affect WLW

Strange RNS from AMS stating shares bought on 9th October were not acquired as seller could not deliver the shares?

May be it was an icelandic seller and the shares are currently frozen somewhere, hence couldn't be delivered... ?

Strawbs.

Wonder what are "underpaid" FSA make of this one - a disclosable interest RNS leading to many market purchases (see above comments + I took a small punt on this very fact) only to be pulled a few days later

Misleading Price Sensitive information, or what ?

Strawbs - The Icelandic holdings are I believe mainly in the form of CFD's, so possibly not them - if it is than even more reason for the FSA to act, as for days now we have been aware of their inability to control stock movements.

as i understand it, Alan Sugar "bought" the shares, but they could not be delivered ..... almost certainly, this block was owned by one of the Icelandic entities whose assets have been frozen

And almost certainly AMS adds egg to his face.

His declaration of intent has gone mildly awry, so will he continue now the share price has moved up?

Probably, imo

He and his mate Phil seem to have something brewing across the retail sector but remember they are not charitable institutions.

AS appears to have "intended to purchase" (those shares which weren't delivered). All rather nasty as it had an effect on the sp.
RM has been declared Finance Director and the sp has fallen 5% today (!). So, I'm wondering if WLW Execs are overpaid...this dir can receive between 40% and 80% - of a very generous 330k pa. -and there's more! - he can recive bonuses from no-cost share-options ( Oh how his wallet must hurt!)...something well over half a million - and the job?
Well, he has a small team of persons that tot-up the recipts from stores, suppliers and so on...to declare a profit, which is mostly paid to the Directors.

Er, so if the Directors weren't there, would these jobs be left undone with the Company swanning about without a rudder?
Er, no the whole mess is because Directors aren't directing....and giving them lots of money means you attract people who are interested in money, rather than the kudos that is gained from a job well-done.

I just hope AS gets to fire a few of them without recourse to severences, bonus, pension top-ups.....and other greases that duffers demand.

-All IMHO....let's see if WLW fortunes Restore . . . I see the Winter Sale extends to Spring Crocus Bulbs . . . . and some stationary has risen 20%, maybe reflecting added buying prices, dunno.

Two new men at the helm, traditional preamble to recovery ... FD with modest targets of 12p & 20p {later would suit me} ... 800 cash inlets ... surely a hopefull senario for holders

You could be right if they stopped running it as a "club" for semi - retired directors.

surely all the old team have now been replaced

halifax - I have no probklem with "retired directors" - but I do have an issue with rewards for failure and lack-lustre performance.....this business is quite simple and obvious to anyone that visits thwe shops - there is no reason to buy there . . . nothing that other stores don't do just a s well, maybe better. The loss of insurance for supliers looks bad and super-rewards for new execs - no, I don't think it smacks of quality management.
Indeed "if" I was worth so much money, I don't think joining WLW would further my career - and just waht does this new bod add to the value of pushing figures about.

Great shame AS hasn't been able to kick a few bottoms.