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Predator could 'Home In' for a bid

It's all about timing.

You would have thought a cash-rich predator would have bid for Home Retail by now after the shares ended the year a depressing 40pc down at 193p after being booted unceremoniously out of the prestigious Footsie in September.

Shares of the Argos catalogue-to-Homebase DIY group have since rallied following a better-than- expected Christmas trading period and yesterday closed 5.2p better at 216p.

Initially sold down to 208p on a sell recommendation from Execution Noble, now part of Espirito Santo, punters switched on to revived talk of a £2.37bn, or 290p a share, cash bid from American retailing giant Wal-Mart, which owns supermarket group Asda.

Growing Asda’s non-food and general merchandising business is something that Wal-Mart has often talked about in the past because it would love to close the gap on Tesco. A move for Home Retail would make a great deal of sense. WalMart is currently bidding for South African retailer, Massmart, but analysts agree that it has plenty of firepower to bid for both.

Recent reports that Home Retail was considering launching a bid for Blacks Leisure (2.5p easier at 33p) has been seen as a defensive move against a possible bid for itself. Execution Noble advised clients to exit because it feels the new 75th edition of the Argos catalogue is biased towards the lower-income consumers, who it believes will face more pressure on discretionary budgets than others.

Source : Geoff Foster - Mailonline

31 January 2011
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