new thread, page-98

Its true cK. Most of this is more for me outlining the thoughts 'on paper' than anything else - which help understand.
Analysis on wow is what I like reading, and its funny how things have worked out.
*First we have Tesco (the huge U.K retail giant, and that held by brk.a) has packed up shop regarding Coles and heading home. As per Fri AFR.
- Interesting to note, Tesco's growth strategy is based around new store openings and driving sales through lowering prices and responding to customers needs. Tesco last FY increased its floor space by 7.3%. Compare this to wow, who adopts a similar strategy (well with responding to the customer needs bit) of only 5.15% based on a four yr average increase.
- Tesco's operating margin is 5.8% compared with wow's 4.5% and Coles 3.7%.
- Most interesting is the property strategy, Tesco prefers to own its property, while wow have long term leases and recently and correct me if I am wrong sold its property and leased them back.
*Secondly, for such a giant to be walking away should suggest that the turnaround and effort/cost for a player already in the game is not worth it. The financial rescources needed are huge. I remember reading that on p/e multiples they are more expensive than what wow is valued at.
*Thirdly, given KKR has been given exlusive data room access despite wes/mbl buying a strategic stake. It may be a win-win for wes if KKR outbid and offer a higher bid. To me it seems that Goyder really wants the Officeworks and Target stores under the wes wing. But since KKR had been rejected at the price offered earlier at $14.50 a share to the close on Friday despite the appreciation of the price, the business itself has slowed to that of wow. Wes being the conservative business acquirer that it is will do what next? And where does this leave wow? They can team up with kkr to buy the Target and Officeworks which will expand the empire or let the bidding take effect and the price continue to climb which will demand more from the buyer which may ultimately effect the level of service/margins if a huge cost cutting program were to be adopted.

In any way, I think Grantham has it right with the private equity call and Buffett puts it perfectly writing about the Mercurial temperament almost 30+ years ago.