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This week should be an important one for several of the big bid situations around at the moment but none more so than J Sainsbury.
Today, TPG and Blackstone seem to have followed KKR out of the consortium bidding for the supermarket group, leaving CVC on its own. No wonder the shares are down more than 20p, or nearly 4 per cent, at 540½p by midday. The consortium’s improved proposal yesterday of 582p received a cool reception from the family. FT Alphaville says CVC is prepared to proceed on its own but the prospects of a firm bid by Friday’s deadline don’t look at all good.
Also by the end of this week, KKR and Stefano Pessina should have completed their due diligence on Alliance Boots and be in a position to make a firm offer. And we’ll see how Imperial Tobacco responds to having its improved proposal of €47 a share (up from €45) rejected by Altadis (whose shares are off a bit this morning). The Franco-Spanish group, you can be sure, is doing all it possibly can to flush out a rival bid, perhaps from BAT and/or private equity bidders.
Don’t expect Barclays to bid for ABN Amro this week. Next week looks more likely. And then it’ll be interesting to see if the mooted rival bidder RBS is just making mischief or is serious. Analysts at Merrill Lynch, whose colleagues in investment banking are advisers to RBS, published a note today on the prospects of a joint ABN bid from RBS and their old friends Santander. Such a move, which we think might be more technically tricky than it looks, would be 5 per cent accretive to RBS earnings by 2009 with a return on investment of around 11.5 per cent, Merrill says. FT Alphaville has also got some Merrill research running through an “additional funding option” for Barclays on the deal.
Interesting to see that British Energy today said it had begun proceedings against Credit Suisse over the exercise of the lending banks’ options to acquire the Eggborough power station in Yorkshire in 2010. The dispute dates back five years to when the company was on the verge of collapse and this coal-fired power station didn’t seem very core. Now, with nuclear plants out of action and the price of gas sky-high, British Energy feels differently about things.
The dog of the day, or should I say car crash of the day, is Accident Exchange, which provides replacement vehicles. Its shares halved this morning after issuing a profit warning in which, rather worryingly, it said it was “undertaking a review of the appropriateness of its current financing structure” and might consider an equity fundraising.
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