Derek Pain: Takeovers are back, so let's stand by to make some money
No Pain, No Gain
Friday 26 July 2013
In its early days, the no pain, no gain portfolio reaped rich rewards from take-over action. Before the financial meltdown, bids materialised with almost monotonous regularity.
Few investors, big or small, could avoid the corporate carnage. The portfolio, launched in 1999, was happy to pocket the cash as constituents, such as the Burtonwood pubs chain, Merrydown, noted for its cider, and supermarket group Safeway attracted take-over assaults.
Among others involved were DataCash, an on-line payments business, the Allied Domecq drinks giant, and support group MacLellan . As the banking crisis gripped the world, the bid action dried up although the portfolio enjoyed a further success when Scottish & Newcastle, the last major British brewing group still standing, relapsed into the arms of Continental brewers Carlsberg and Heineken.
Since then the portfolio has enjoyed one bid success – the take-over by brewer Greene King of the Capital Pub Co in 2011. That particular deal was all the tastier because it occurred just months after recruitment.
At long last, new bid action has emerged. Brightside, the specialist insurance group enlisted last summer, has said it is in talks that could lead to an offer. The bidder could be Markerstudy, a Gibraltar-based insurance group which already controls 9.3 per cent of Brightside.
Whether the negotiations will be concluded successfully is another matter. Markerstudy has indicated it is prepared to pay 27p a share, pricing the insurance vehicle at £123m. But, at the time of writing, Brightside shares have topped the bid price and I recall stockbroker FinnCap putting a 31p target on the shares earlier this year.
So it seems to me the Gibraltar group will have to up the consideration if it wants to win the day. Few bidders start off revealing the eventual level they are prepared to pay and I suspect Markerstudy is happy to play this time-honoured game.
It acquired its Brightside holding early this year, picking up shares from a former and a current director at around 22p a pop. The build-up followed a deal signed in October for a new underwriting facility to back Brightside's highly successful eCar internet service. Markerstudy, under the take-over code, has until the 13th of next month to come up with an offer although extra time is always a possibility. Should the 27p bid go ahead the portfolio, which paid 18.5p a time, will be more than £2,000 in profit. Not a great reward compared with some past hits but, even so, not to be sniffed at.
The possible bid for Brightside is symptomatic of higher share prices leading to an increase in stock market merger and acquisition activity. There has been a gentle build-up of take-over action in recent months with the unrequited £5.3bn approach to water utility Severn Trent topping the bill. Others in various forms of action include mining group ENRC, valued at more than £3bn, and engineer Invensys, also with a £3bn-plus price tag. Invensys has so far attracted French interest but many observers believe others are considering approaches. And there are other targets, real and rumoured, under the shadow of assorted take-over talk.
Whether the portfolio will share in any further dramatic merger and acquisition upsurge remains to be seen. I will be recruiting at least two newcomers in the next few weeks and will obviously consider any candidate's bid potential.
Of the current incumbents I suppose the likes of Essenden and the Spirit Pub Co look the more likely to attract attention. Essenden is capitalised at only £5.9m and Spirit, with its shares near a peak, at £485m.
The Whitbread leisure group could also be involved in corporate action - not necessarily a bid but a sell-off. Rumours it intends to float its rapidly expanding Costa Coffee operation have died down, but I suspect such a possibility is not too remote from chief executive Andy Harrison. Besides spending on the coffee front he is keen to increase the hotel business. Both ambitions cost money.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Mark Dampier: Don't panic. Canny investors sit tight when the stock market falls
Shareholders can hold a company to account
Derek Pain: Dividends ease the suffering in a moribund stock market
Questions of Cash: Payment woes with Barclays overshadow Cornish holiday
Bank-beating exchange rates on your international payments
- 1 McKamey Manor: This 'extreme' haunted house is the stuff of nightmares
- 2 Russell Brand says he will 'probably' give up acting to focus on his revolution
- 3 Watch what happened when food critics were unknowingly served McDonald's
- 4 David Beckham's Haig Club whisky is exactly what’s wrong with the Highlands
- 5 Ottawa shootings: Bruce MacKinnon's cartoon is the perfect tribute to soldier Nathan Cirillo
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Tony Blair 'says Ed Miliband will lose 2015 general election'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Putin: The US is to blame for almost all the world's major conflicts
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village