Arla Foods Uk Share Discussion Threads

[quepassa] 28/12/2006 13:06

Yes, a lot of this may be correct in an open sale of ARU but you cannot ignore the strategic importance of Arla Uk to Arla amba - and that is where the added value lies. The marriage value of Arla amba and Arla UK is worth significantly more than a basic historically-calculated p/e valuation of the company.

As Gerry pointed out Arla amba already "own" 51% of the pension fund and were aware of the pension fund challenges before they declared talks.

Arla Uk is the vital spring-board for amba into the UK and European markets. They are not imo going to let this opportunity go, especially after recent debacles with Campina and the Middle-East affair.

Personally believe that the institutions are indeed holding out for a higher price than 72p. I continue to see a price nearer 80p. - Time will tell.

[tiredoldbroker] 28/12/2006 12:50

I think the facts are still what they were a couple of months ago - ARU is a low-growth business in a market which is already consolidated and highly competitive. It has a 30 September year end and to 30/9/07 the forecasts are a pre tax of £43.1m and eps 4.92p, then into 2008 £47.6m and 5.39p. That increase in the pre-tax is all the benefit to come from plant closures and disposals in the medium term; you simply cannot accurately forecast anything longer term than that as there are too many imponderables.

So the absolute, unavoidable fact is that a company like this isn't ever going to command a p/e ratio much over 14 - indeed, there's a case for saying the p/e shouldn't exceed 10. You can buy genuine growth stocks with more reliable prospects on a long-prospective p/e of under 14 in a great many cases.

14 times the long-prospective earnings per share is 75.46p and I still tell you that the offer, when it comes, will be a little under that level. There's the pension deficit to fund and many holders - including institutions - will be galloping for the door at 72p after seeing the shares down in the 40s earlier this year.

Unless you can make a sensible case for a company like this to have prospectively much higher and more reliable earnings, I really don't think it makes any sense to suggest higher prices, now or in 12 months time.

[gerry321] 27/12/2006 22:04

..........In fact
Maybe we small PIs should be looking for this bid to be unsuccessfull and be resurrected in about 12m when it ought to be around 90p

[gerry321] 27/12/2006 13:19

Typo/Que
Amba are described in the article as a potential "new owner" from whom the pensions trustees have to secure a committment to fund the existing deficit

Surely Amba are already the "owner" by virtue of their 51% stake in Arla UK
and hence are already obligated to maintain the existing deficit........perhaps only from UK resources
The only difference I can see is that the acquisition of 100% of the shares may involve a technical change in the definition of the "owner" from a UK co to a UK subsidiary of a non UK co
.............perhaps requiring Amba to commit non Arla UK resources if needed to fund a UK pension deficit........??
Can`t really see the pension issue as a show stopper.......if it is somebody on the Amba Board needs their bottom smacked since the deficit existed and was no doubt evaluated when the merger took place 3 years ago
The strategy behind Amba`s initial merger was predicated on eventually extending the coop ownership concept to the UK .........events in the middle east have only strengthened this argument by reinforcing the reduced volatility of the UK market.......
......So I conclude the deal will go ahead and all this pension stuff is simply a tactical ploy to get the price down by frightening the funds
In any event if in fact the deal does fall through or get postponed the benefits of £100m capex and closures which have yet to be fully reflected in the bottom line ought to emerge during 2007 and enhance the sp
.........making the eventual bid share price even greater............

[quepassa] 27/12/2006 07:57

Thanks for giving the link to the article which also appeared in The Sunday Times.

The article could have been cobbled together by the journalist just by reading the postings on this bb over the last few weeks.It adds nothing that we did not already know.

We already know that negotiations have been protracted due to the pension scheme questions.

From what I recall of the article, there is no authoritative source mentioned in the article, no quotes from company representatives or attributions to milk trade specialists.

The Headline is attention-grabbing but that's all - and certainly did not give any facts or hard evidence of any nature in my opinion that merger talks are in trouble.



IMO/DYOR.

[typo56] 27/12/2006 07:33

Anglo-Danish milk merger threatens to go sour

[hammy davies snr] 22/12/2006 13:38

Christmas Tree Shake, imo.

[lord r] 22/12/2006 13:12

Denis

All the best for Christmas and the New Year!

Hope this one will come good for you soon.

[gerry321] 19/12/2006 18:46

Does anybody have a theory as to why we still have a sizeable volume of stock changing hands so late after the bid announcement .....?
Could it be something to do with traders being caught short of money or stock by the length of time it is taking to announce a bid............??

[damofarl] 17/12/2006 13:30

I'd agree the pensions are probably the main reason holding up announcement, bearing in mind there are a number of different schemes to deal with (Claymore, Express, Arla etc.). Another consideration (delay) maybe dealing with the ARU jv's such as Claymore/Staplemead etc,- their partners may have first refusal clauses in the event of takover.ARU's board may also being pushing for a higher price, but realistically this is a non starter with amba's 51%. I still stick with 72 as with their control amba can argue that this is at a 12 month high, and a 40% premium to preannouncement share price It would be hard for ARU to argue with the black and white of that, even though personally i think amba have cleverly engineered the price down. I don't doubt an announcement is forthcoming; amba's year end was the same as ARu's but they've yet to post 05/06 accounts, i think they're holding it back to put 'ARU full control' news in the Board's statement, some good news to smooth over the coop's members dissapointment last year at the Campini merger failing.

At a guess of 72, i agree it seems strange that people are not taking the 10% upside, but then nothing is guarenteed; as for Wiseman/Dairy Crest laughing at the takeover, with ARU preoccupied and taking its eye of the ball, i'm not sure i would agree with this; whilst probably true of the last 2-3 years, i think amba's influence of ARU has been crucial in bringing a hotchpotch of disjointed assests to fruition, takinga strategic longterm view (rather than fire fighting the old Express/ARU way), and its very much buisness as usual for ARU.

Personally, my regret is that the offer is (will be) cash, and not shares in a incorporated amba, as frankly i think (at whatever takeout price) amba are getting the cream of ARU cheaply, and amba (for a coop) seem rather astute in their worldwide dealings, and would itself get taken out. Just my own ramblings of course! D.

[gerry321] 16/12/2006 21:32

Den
thanks fo info..........
assuming youre correct......
the deal is still on.........
and the bid share price cant be affected as this is not new news for amba...... suspect it will be a tax issue......imho

still can tunderstand why residual stock ant being snapped up at around 64p.......its almost a guranteed 10%....

[deniscaff] 16/12/2006 16:01

I hear the hold up is to do with the pension deficit and how to address it, an announcement is expected before the Christmas holidays. Don't shoot the messenger if it proves to be incorrect but It came from a good inside source.

Cheers

[deniscaff] 14/12/2006 13:35

lord r

Unfortunately not, I've left most of my investments in the dairy industry as I realised a couple of years ago that it was in for a period of stability after years of restructuring left it with just three main players , I figured that two out of the three would always do o.k at the expence of the other one depending on how the major retailors moved their volume about, It's paid of so far with RWD and Dairy Crest at record high share price levels and paying good dividends, Arla going for anywhere near 75p would be the icing on the cake as my weighted ave is 42p.

Cheers

[gerry321] 14/12/2006 11:10

Does anyone have a reason to think the bid announcement might be delayed into Jan ??

[lord r] 13/12/2006 17:38

Denis

Safe journey back.Did you ever get any of those Business Post Group shares i mentioned a while back?

[deniscaff] 12/12/2006 16:58

Good Afternoon damofarl ( still just about morning here ) Agreed !!

[damofarl] 12/12/2006 15:13

Afternoon, deniscaff/lord r; r,e,388/389. the whole is greater than the sum of the (posters') parts! D.

[deniscaff] 12/12/2006 14:43

lord r

While singing the praise's of contributors to the board I should mention tiredoldbroker who for me is always "spot on"

Cheers

[deniscaff] 12/12/2006 13:42

lord r

Nice to hear from you I have been in Florida since October on business but am about to return today,I haven't posted much since the announcement leaving it to the more technical minded and capable Gerry,Que and damo, I was informed from the inside on the day of the announcement that talks were expected to go on until the end of the year , RWD and Dairy Cest must be laughing their socks off as their share price goes to record levels as Arla take thir eye of the ball, I've no idea what the final offer will be but the institutions and the milk partnership appear to be in no hurry to take the money and run,I'll be disappointed with less than 80p but I've been disappointed many times before !!!

[lord r] 11/12/2006 17:30

Denis

Hi, how are you doing? Finally got my computer fixed after many months & am catching up on all the action?

Pleased that ARU finally seems to be getting somewhere.

Are you in the UK for Christmas or r u enjoying warmer climes?

All the best.

[gerry321] 07/12/2006 12:31

Que/Damo
Thanks very much for info......
......re todays big trades........presumably these are from one big holder to another big holder as there is no impact on the share price surely if not Amvescape these are being moved around by amba friends to stay under 0.99%..........and avoid an rns........?

[quepassa] 07/12/2006 10:39

2 x 500k purchases just went thru' at 64p. - Good to see that there is still buying esp bearing in mind that the share is now ex-dividend and no longer carries the 0.8p dividend entitlement ( subject to AGM/EGM !! ).

[damofarl] 07/12/2006 10:19

Gerry/Quepassa, posts crossed; Quepassa's 4- i agree as i believe there is such a 'takeover' clause in employee sharescheme.D.

[damofarl] 07/12/2006 10:14

Gerry,

Amba's website says cash offer; i checked amba's a/c's and the way articles of association for the coop are written, i don't see that they could issue amba paper.

"Arla Foods amba has entered into negotiations with its British subsidiary Arla Foods UK plc which may lead to a recommended CASH offer to purchase the remaining 49% of the shares...."D.