In the second document posted to shareholders since Quebecor announced its bid in December, Watmoughs pointed to the strong growth in its markets in recent years, fuelled by factors like the increase in newspaper supplements and the rise of supermarket loyalty magazines. The group also painted a rosy picture of its future, pointing to the healthy growth prospects for its operations in Spain and Hungary.
Meanwhile, Watmoughs dropped a strong hint that profits for the year to last December would be stronger than previously expected. Watmoughs is expected to publish a profit forecast as part of its final bid defence, which is due next week.
However, Quebecor immediately hit back by stressing Watmoughs' dismal recent profit and share price performance. "If they can only achieve a halving of the share price in such favourable conditions, what will they achieve in the more difficult markets of today and tomorrow?" asked Charles Cavell, President and Chief Operating Officer of Quebecor's international division.
Watmoughs' share price was unchanged at 279.5p - a 22.5p premium to the value of Quebecor's cash offer - suggesting that investors think the predator will have to raise its bid in order to win. Most observers argue that the current bid undervalues Watmoughs.
"It's round one to Watmoughs," said Henderson Crosthwaite analyst Louise Barton. "Whatever valuation you use the current bid is too low."
Nevertheless, few observers expect Watmoughs to retain its independence. They point to management succession problems - long-serving chief executive Patrick Walker returned to the job from semi-retirement last year when his successor resigned, and he has already announced his intention to step down after two years. As a result, Watmoughs shareholders are thought to be reluctant to wholly reject a bid. Analysts suggest an increased offer of around 300p a share would be enough for victory.
What's more, Quebecor's options are limited. Although the group says it plans to build a UK business from scratch if it does not secure Watmoughs, observers dismiss the suggestion that it would invest in expensive printing equipment before it had won any clients.
"That idea is completely barmy," said one.Reuse content