Taylor Woodrow Share Discussion Threads

[gamsby8] 03/2/2006 16:04

Looks like being a good day today especially if you hold PSN.back above yhe £4 mark for TWOD.

[lafiamma] 02/2/2006 09:29

Long again 394.5 on positive sector/market action

[Abuse team] 02/2/2006 05:49

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[Abuse team] 02/2/2006 01:10

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[judge jury] 02/2/2006 00:36

Gamsby8 - I dont think anyone can answer your questions with any certainty. However, speaking very generally, when all share mergers are announced you often see the offeror's share price fall initially (in this case TWOD) as the offeree's share price rises (in this case WMPY). This is because hedge funds (NB arbitrage firms) like to short the offeror and go long on the offeree. I think they make money on the inefficiency of the market, with very little risk. You need big bucks though to do this.

Often this effect is short-lived and the institutions instead will focus on the merits of the deal (rationale, post-merger strategy, synergies, who the management will be).

I remember when Morrisons announced its initial all share merger with Safeway. Morrisons share price fell and then continued to fall as people worried that they were biting off more than they could chew (ie massive integration risks).

That said, I believe the City will love this deal. The logic is compelling (strengthen slightly weak UK businesses, create strong platform in the US); synergies are high and achievable (I reckon £65-85m). There will probably be a cash component to the deal of the order £500-1,000m (special dividend to both sets of shareholders and/or promises of share buybacks post completion). There is also the added bonus that this will propel the new business into the FTSE 100.

The share price action backs this view up. I therefore think TWOD's price will eventually rise, even if there is short term volatility.

[gamsby8] 01/2/2006 20:27

If there is a merger between twod / wmpy what would be the opening share price and would we see all the upsides as we are with PSN.

[judge jury] 01/2/2006 16:56

Also, a £4bn merger with WMPY, propelling TWOD into the FTSE 100, together with the associated forced buying, makes me think the risks are to the upside.

[judge jury] 01/2/2006 16:55

Fair enough. I definitely watch bond yields. I can live with 10 year Treasuries below 5% but wouldnt like to see them much higher than that.

Otherwise, I see scope for pretty significant earnings upgrades. For example, TWOD is currently forecast to show zero earnings growth this year. I just dont believe this (unless yields jump massively). Of course, earnings can grow and multiples contract but I think the market is gradually accepting that the housebuilders shouldnt trade on 5x PERs.

[lafiamma] 01/2/2006 16:18

Lots of froth combined with complete ignorance of the Iranian situation and potential for rate hikes (& rising bond yields).

I think there is a high risk of a sharp downwards move at some point in the not too distant future. If I owned the shares I'd just stay put, but with no dealing charges yet interest to pay for holding positions over night, I'm happy to keep buying the dips and selling the rebounds, for now...

[lafiamma] 01/2/2006 16:08

Closed for now 397.25. Being ultra cautious with my capital in this market...

[judge jury] 31/1/2006 23:25

A TWOD/WMPY merger is one of those deals that is crying out to happen. The large shareholders in both companies should be banging the executive's heads together to thrash out a deal. For what its worth I still think that is exactly what has been happening.

Very often though, mergers take longer to thrash out because:
1. Both sides need to due their due diligence on the other whereas normally its just the bidder that has to do its research
2. There are always arguments over management positions
3. There are always arguments over the merger terms (merger ratio, how much cash should be returned to shareholders etc.)

A deal could be announced at any time, hence I think it is a risk to be out of these stocks (WMPY in particular since it has more to gain). However, I agree with laf that it could take a few more months to thrash out. Both companies also have to report their final results and this will be pre-occupying the CFO's. Once these are out of the way, both sides will have audited numbers (more comfort) and the time concentrate on the deal.

PS. Very sceptical re BDEV buying anything. They would have to pay a normal premium and the sector is already trading well above book value which means BDEV would have to pay something like 2x book value, which I just dont think they will do.

[gamsby8] 31/1/2006 21:11

Why the sudden drop in twodssp today i know they were downgraded but so were bellway

[lafiamma] 31/1/2006 20:41

I'm pretty sure there won't be a tie up between BDEV and either TWOD or WMPY, there are many more suitable candidates for BDEV to acquire.

I do, however, think a TWOD/WMPY tie up is very feasable, but don't expect it to happen any time soon (i.e. within the next couple of months)

[gamsby8] 31/1/2006 20:36

does anyone still think that something will still happen between bdev wmpy and twod .Any two from three.

[lafiamma] 31/1/2006 11:25

Long again, just under 391

[hectorp] 30/1/2006 15:32

Short term, its a short IMO. I know its well covered etc, but sector sentiment can send these builders way down again.
I remember when no-one would buy Wimpey at 115p.

[gamsby8] 26/1/2006 19:37

Is this the calm before the storm.TWOD AND BDEV WAITING FOR THE OTHER

[gamsby8] 25/1/2006 20:12

TWOD WMPY BDEV Which one is going to be left on the shelf .It looks for certain wmpy plus one but which one?.I hope its not twod because they could leave themselves vulnerable.

[lafiamma] 25/1/2006 09:45

whoopsy-daisy!

[lafiamma] 25/1/2006 09:04

Sold @ 398, see WMPY thread for latest news

[gamsby8] 24/1/2006 21:01

big trades in wmpy today.Hope TWOD not going to be left behind.Twod price .starting to come under pressure

[judge jury] 24/1/2006 11:12

TWOD is trading on a 2006 PE of 8.1x (compared to a sector average of 8.5x) and is yielding 3.7% (comfortably covered 3.4x) which isnt bad when you look at what you can get from gilts/cash etc. TWOD is ranked 116th in the FTSE list, so may well get into the FTSE 100 at some stage and look what happened to PSN when that happened. You have got to be a brave man to short this stock in my view.

[hectorp] 24/1/2006 11:06

I'd love to short this... but not yet.