Is Tesco a takeover target?

[Deleted User]

Hi,

thinking of taking a punt on Tesco, on the chance of a takeover now they are in a mess, or at least they will recover.

I like a gamble and don't mind taking a chance for a few grand.

Worth a punt, or just stick my few grand on first fav in 1.30 Southwell today?

Seabee42

Tesco needs to restructure its business in the UK at least. This applies regardless of whether its taken over or not. Hence there is no value in a take over. Its not like it is sitting on a massive land bank or has hidden assets.

Glen_Clark

Seabee42 wrote: »

Tesco needs to restructure its business in the UK at least. This applies regardless of whether its taken over or not. Hence there is no value in a take over. Its not like it is sitting on a massive land bank or has hidden assets.

Value in a takeover arises when another company can get more revenue out of the assets than the existing management. But I think Tesco are too big to be taken over because of competition issues.
I am slightly encouraged by todays results because they show most of the overstatement relates to previous periods. So profits have not been falling as fast as was first reported.
But their biggest problem is still getting worse and is outside their control. As the gap between rich and poor gets wider, all the middle of the road grocers like Tesco continue to lose customers at both ends.

InvestInPoker

Even buffet's got rid. Avoid.

Seabee42

It seems a large part of its profit comes from suppliers rather than sales (margin on sales is supposedly very small) and as their market share is hit clearly the benefit to the suppliers is also hit and therefore the amount Tesco can squeeze from them is also hit.


It does sort of explain why all the supermarkets spent so long chasing share of the market.


Given Tesco has been squeezing them just a bit to hard (supposedly) its hard to see how a takeover could improve the profits from that end.

Thrugelmir

Out of town retailing is in decline. Tesco, B&Q, Homebase etc all showing distress. Simply too much floor space. Perhaps the era of UK consumerism is over as austerity bites. Shopping is no longer an experience. Though I never understood what that meant!

Tesco's is big enough to realign itself in the market place. What will be interesting is the waves it creates. As it does so. Quite likely that it may sink so other companies in the process.

Minrich

InvestInPoker wrote: »

Even buffet's got rid. Avoid.

But he only sold 25% of his holding , so why keep the 75% ?

Minrich

Thrugelmir wrote: »

Out of town retailing is in decline. Tesco, B&Q, Homebase etc all showing distress. Simply too much floor space. Perhaps the era of UK consumerism is over as austerity bites. Shopping is no longer an experience. Though I never understood what that meant!

Tesco's is big enough to realign itself in the market place. What will be interesting is the waves it creates. As it does so. Quite likely that it may sink so other companies in the process.

Out of town retailing here in Suffolk is thriving , its the town centres that are struggling , i do think huge supermarkets are not used as much . DIY is on the downturn as the younger generation (<30) have no idea how to do DIY and you can just go on line and get your stuff delivered if you do , or Screwfix type companies .
Tesco in our area have been buying up many old pubs and banks and converting them into smaller supermarkets . They far outweigh all other main supermarket retailers in the smaller supermarkets and also online is also thriving for Tesco . They also have made £100m plus from Tesco Bank .

Generali

Minrich wrote: »

But he only sold 25% of his holding , so why keep the 75% ?

Because he has a fiduciary duty to get the best price he can for the shares. He can't just dump the lot.

Minrich

Many parts of the media have quoted a 92% drop in profits to £112m , so misquoting the figures too !
At least the BBC News at 1pm has rectified the error a little saying their profit was £780m for the first half .

sparkychris

What would happen to share prices if they were taken over?

I cleverly bought a few shares a couple of weeks ago and have watched them tumble ever since... Have never bought shares before- was just taking a punt with a few quid I could afford (but obviously don't want to) lose...