Alpesh Patel joins Global Business Europe

Alpesh Patel joins Global Business Europe

now there have been record levels of takeover activity and bidding wars for two high-profile british companies battles are underway for uk drug maker vectura and britain’s fourth largest supermarket chain morrisons al patel is an investment analyst and founder of the private equity house profiling partners uh alpesh good to see you this battle for a british maker of inhalers has intensified the world’s biggest cigarette maker philip morris international has increased its uh takeover offer for vectura after the private equity company carlisle raised its offer why is vectura such a big prize well one of the things which caught my eye was that it’s going to be making inhaler treatments for covid19 but that’s not the only reason philip morris have said they want to get out of selling cigarettes within the next uh 10 years or so so they need to start making these acquisitions perhaps one other reason it’s an important acquisition for them is vector is at its 2006 price level so arguably it’s pretty undervalued um its highs are still 50 above where it is at the moment so there’s a lot of potential to the upside 180 pens is what i would want to see for this bid to be win-win you know leaves a bit of room uh for some more upside for the bidder and still gives a good return to the shareholders so i think there’s a bit more to go here the other complication with this is vectors ethical shareholders who won’t want to be shareholders in a tobacco maker they’ll have to dump stock so that’s an added complication with this one well you bring us right on to my next question uh the philip morris offer is very controversial um the cigarette maker trying to buy a company that treats respiratory problems i mean investors some investors really do care about this don’t they yes absolutely it you know it it moves philip morris more into an ethical space it moves them more into their future it moves them more in line with what there’s a global focus on which is most definitely away from tobacco more towards health and when you think about all those uh social issues so there’s a lot of reasons why this fits in well with philip morris but that price point uh if i was a vector shareholder i’d be thinking i i need a bit more out of this let’s talk about supermarkets it’s been reported one of the companies chasing morrisons cdnr is considering a counter bid after fortress increased its offer how’s this uh bidding war got further to run oh most definitely it morrison’s uh well they 328 pence roughly is their all-time high this offer these offers around p are well short of that i’d say about 300 is what i’d like to see as a shareholder in morrison’s i used to be a shareholder in morrison’s and i’ve been following this company for over 20 years and i think there’s a lot more potential here so the takeover panel in the uk has given a bit more time to the uh the american bidder to improve that offer come back for more uh i think there is a bit more to be squeezed out here out of this and like i say i’m expecting at least another oh i’m thinking about another 10 uplift on what the best offer is at the moment on the table i was just so surprised that morrison’s board had agreed to the previous the initial offer which was even lower than this uh they just seemed so desperate to accept the offer straight away without even saying you know without doing well hang on let’s open it up to the broader market uh they just seem to pull the trigger too quick i think and i’d be very disappointed if i was a shareholder with the board right now and how quick they were to agree to the very first offer that they’ve got alpesh good to see you thanks for coming on the show i’ll push patel there for us in london
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Alpesh Patel joins Global Business Europe

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