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Babcock International - Bid approach

May 2006

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • BAB
  • Price:
  • 306p
Shares in Babcock soared to 306p after the defence support services business announced that two rivals, VT Group, 455p and BAe Systems, 417p, were exploring the possibility of a joint bid although no official approach had been received. Babcock also noted that its full year results would be ahead of expectations while the order book is standing in excess of £2 billion. We made Babcock a front-page recommendation last September at a price of 178p, so the gain stands at 72% after only eight months. With the MoD actively encouraging its suppliers to merge we aren’t surprised by this development – we even flagged up the possibility in our conclusion! Await developments. ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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