Have the good old days of takeover activity returned?
Last week’s announcements certainly gave a boost to the markets. The week began with a £10 billion hostile takeover bid by Kraft of the US for Cadbury. This was followed up with the news that Deutsche Telekom and France Telecom are looking to merge their UK businesses (T-Mobile and Orange respectively) to form what would be the largest UK operator. The more recent strength in the markets generally may well have given some management boards the confidence to go shopping again. At the same time, some particularly well managed companies with little debt on their books may be looking to go on the acquisition trail after all, their intended targets could easily be at a much lower price than they were a year or so ago, thus offering more compelling value. At the same time, there are certain industries where some consolidation is appearing increasingly likely, particularly those where the barriers to entry the cost of setting up a new business are extremely high. This could apply to the likes
