Cadbury takeover: Which British companies are next?

The weakness of the Sterling ensures easy takeovers of British brands. Next, you will find a brief explanation.

This week there was a surprising takeover bid of Kraft. They want to take over Cadbury for £10.2bn. This has a big influence on the stock market returns. Investors are happy, they have enjoyed the sweetest summer rally in decades. First, Cadbury refused the offer but FTSE 100 index surged to a new high for the year. It reached more than 40 pc above its low point of 3,512 in March.

The last weeks, there were going on a lot of big amazing deals. Next to Cadbury-Kraft, there was also a link between Orange and T-Mobile. Enthusiastic people thinks there may be more such deals to come. The market confidence returns and because of Sterling’s weakness, British brands become easier to reach for foreign predators. Some intelligent British fund managers have already marked up gains of several million pounds last week.

Robin Geffen of Neptune Income believes there will be a further consolidation in the tobacco sector. British American Tobacco is too large, but Imperial Tobacco might be attractive because it has the best potential position in China and eastern Europe.

On the other hand, Derek Stuart of Artemis Special Situations fund, thinks that any company with strong market share and brand are particular candidates for a takeover. Companies like Diageo and Unilever are very interesting. They improved the access to capital but they still obtain for a private equity.

Fund managers also believe that the global recovery is now becoming a reality. Because of high levels of cash, it is believed that the booming period after the crisis has started. Money flows are also likely to benefit equity markets. A little remark: A positive 12 month evolution also ensures a volatile experience because of the fragility of the macro economy.

I believe the opportunities of companies to takeover other brands, are an identification that the booming period after the crisis is slightly starting. Companies are able to put funds aside to place offers for takeovers. The fact of the restart of cash flow means there are more liquidities available for the companies. Companies with a liquid position are normally better for their economical growth. I’m just wondering if every company makes the good choice to takeover another one. On the short term, there will be certainly an economical boost, but I’m not sure this will reach into the long term. Another important aspect is the volatility. I propose 1 thing: let’s just all wait what the after-crisis-period brings and let’s just hope the best for the economy. A recovery of the economy is still a main requirement to get a better economical world!

Source: http://www.telegraph.co.uk/finance/personalfinance/investing/6166757/Cadbury-takeover-Which-British-companies-are-next.html

Posted by Joachim De Zutter