Bid blood and private equity

摘要

Wh smith's share price, 260p at the end of last week, closed at just under 350p on April 19th, after one-sixth of the shares had changed hands in a day, on news that a private-equity firm had in mind a bid of 375p. It wasn't alone. Wool-worths, Somerfield and Marks & Spencer, three other troubled retailers, were all up about 5%, a fat gain on a day when the market overall barely budged. The speculators smelled blood. In recent years' stockmarket gloom, the old-fashioned takeover battle among quoted companies eager to expand has given way to a still older fashion, the swoop of the outright predator ready to grab some enfeebled prey and sell it on at a profit. Often, the predator is a private-equity group, and the profit, after a year or two, very juicy: Permira, the firm now eyeing WH Smith, is said to have quadrupled its investment in Homebase, a do-it-yourself retailer that it bought from Sainsbury's in 2000 and sold to GUS within two years.