It’s crystal ball season...as analysts ponder takeovers

IT’S that time of the year again when City scribblers get their crystal balls out and test out their skills predicting takeovers.

Peel Hunt’s number crunchers have compiled a list of possible takeover targets and some of the names mentioned raise some eyebrows.

They include Burford Capital, the litigation financing business which has come under fire from short-sellers questioning its accounting; and Ted Baker, the fashion brand whose founder and 35 per cent shareholder Ray Kelvin was ousted over alleged ‘forced hugging’ and which admitted to an accounting error before Christmas. The Mail on Sunday revealed that Kelvin himself had told friends he had considered a bid for the business he founded in 1988, but the brokers think private equity and trade buyers could be potential owners.

Peel Hunt also reckons the share price slump for discount retailer The Works.co.uk means it ‘must be flashing on private equity radars’. It adds that rival retailers Card Factory and WH Smith could also be interested. That would bring an end to the pain for investors who have seen the shares slump 80 per cent since it floated in July 2018.

ON the fantasy M&A theme – and with climate change at the top of the agenda – investors are starting to eye opportunities in the renewable energy sector.

Scribblers at Goldman Sachs think SSE could be a target for any interested buyers. SSE has shifted its focus towards renewables, underlined by the move to offload its energy supply arm to Ovo. And SSE is now worth three times as much as British Gas owner Centrica. ‘We believe SSE stands out as a possible target were we to see mergers and acquisitions in the sector,’ said the Goldman analysts, who reckon takeover action is about to heat up.

THIS week, a raft of companies will be reporting on trading for December and throughout the General Election period – giving a good indication of sentiment for business and consumers amid concerns that it will have slowed things down.

Sofa seller DFS is among the companies reporting, with analysts predicting like-for-like sales down for the first half of the year.

But investors are likely to focus on business since December 12.

Elsewhere, Halfords could report a stronger third quarter thanks to the weather.

It may have been wet, but at least there was no snow to prevent people driving to stores.