This UK share just spiked 15% on bid news. Can we bag a quick profit?

UK share prices are having a good 2024, so far, and this one’s already up 39%. Two takeover bids in a month have been a big help.

| More on:
Investor looking at stock graph on a tablet with their finger hovering over the Buy button

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Some UK shares look ripe for takeover, and Britvic (LSE: BVIC) has just swung into view.

On 21 June, the company confirmed a bid from Carlsberg at a price of 1,250p per share.

The bid was made on 11 June, and came after a previous offer from the same bidder at 1,200p on 6 June. The share price gained a quick 15% when the news broke.

A bullish 2024

It follows a smaller rise the previous day, based on the speculation. And it comes not long after interim results in May gave it a boost.

In all, 2024 has been great so far for Britivic investors, with their stock up 39% since the start of the year.

How was this new bid received? The board says it “significantly undervalues Britvic and its current and future prospects“, and kicked it out.

The 1,250p bid was 23% ahead of the previous day’s close. But with the Britvic share price up 15% to 1,168p, at the time of writing, that premium has dropped to 7%.

What next?

We might see a further bid, though we really can’t know if any firm offer will be made. For its part, the Britivic board says it will “consider any further proposal on its merits“.

Clearly, quite a few investors have jumped on board already. Is that in the hope of a new bid and a quick profit? Or have these events made them realise Britvic shares are cheap, based on their long-term merits?

I’d like to think there’s more of the latter, though I suspect otherwise.

What should we do?

Those who think there’s a chance of a third bid from Carlsberg, or something from a new bidder, might need to move fast.

These things, once they’re out in the open, often tend to move quickly. There are rules, for one thing, that mean a bidder has a limited time to put up or shut up once their intentions are known.

For me though, that would be too much of a risk. I’ve no idea what will happen next, so betting on it would be a pure gamble.

Long-term value

Instead, I’d take a good look at the company and weigh up its long-term value. And if I think it’s a good one to consider buying and holding for a decade or more, it might go on my buy list.

But I wouldn’t buy until the takeover mood has faded, as I think the share price is very likely to fall should it become clear that no further bids are on the cards.

I know I’d miss any quick profit should someone stump up enough cash to buy out the stock. But that’s fine.

Valuation

First-half results looked upbeat all round. And forecasts show steady earnings and dividend growth in the next few years.

Beyond that, I haven’t done any more research yet. But that’s where I’d start.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Britvic Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Down 23%! Should I buy more CrowdStrike shares for my Stocks and Shares ISA?

Sometimes bad news can be good news for long-term investors. But is that the case for CrowdStrike in relation to…

Read more »

Investing Articles

2 UK shares near 52-week lows I’m considering snapping up

These UK shares are loitering near, or at, 52-week lows. Are these prime opportunities for our writer to boost her…

Read more »

Investing Articles

Unilever: a passive income stock with potential for decades of dividend growth

Stephen Wright thinks Unilever can keep reducing its share count for years to come. And this should help make it…

Read more »

Middle-aged black male working at home desk
Investing Articles

Worried about retirement? I’d buy high-yield dividend shares to build wealth

The number of pensioners enduring poverty in the UK looks set to rise. Investing in dividend shares could help Britons…

Read more »

Investing For Beginners

2 boring but beautiful FTSE 100 stocks to add to my ISA

Jon Smith runs over a couple of FTSE 100 stocks that he really likes the look of, even though they…

Read more »

Investing Articles

Here’s how I could supercharge my wealth by snapping up the best dividend stocks!

This Fool explains how dividend stocks play a crucial part of her aspirations to build wealth, and details one pick…

Read more »

Young female analyst working at her desk in the office
Investing Articles

Revenue up 10% and accelerated growth potential for this overlooked FTSE 250 company

Today's first-quarter update from this good-value FTSE 250 company keeps me keen on the stock as recovery and growth continues.

Read more »

Investing Articles

Here’s why I’m so bullish about the BT share price now

The BT share price shot up after FY results, and a couple of months on it's still up there. Might…

Read more »