The Investment Column: Bolloré's running board battle keeps Aegis on the boil
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Your support makes all the difference.Aegis Group
Our view: Buy
Share price: 138.5p (-1.25p)
The past 18 months have been an exciting time for shareholders in media group Aegis, as the company has found itself engulfed in persistent takeover speculation. Last year, rivals WPP and Publicis plotted to take out their smaller rival, while over the past 12 months it has been all about the flamboyant French media mogul Vincent Bolloré.
Mr Bolloré, who owns a 29 per cent stake in Aegis and is also a major shareholder in the company's rival Havas, has spent most of the past year attempting to get representation on the Aegis board. Although his two candidates - the telecoms executive Philippe Germond and the former Pearl & Dean chairman Roger Hatchuel - are both respected media executives, shareholders and the Aegis board are understandably concerned that the pair would act as Mr Bolloré's spies - and leak their plans back to Havas.
At last month's AGM, after having his proposals voted down by investors yet again, Mr Bolloré insisted he would not be giving up. Despite having said many times that he has no interest in buying the group, it is clear that as long as he retains his large stake and his over-enthusiasm, Aegis shares will trade at a premium in recognition of a potential bid.
Yet, while the shares have moved up and down over the past year, they have largely remained in the 120p-140p range. Meanwhile, the company has continued to grow strongly and is now gradually beginning to justify its premium to the rest of the media sector on the back of its performance. Yesterday's trading update revealed another increase in organic growth in the second quarter. In particular, the group's digital division, Isobar, has rocketed ahead, as the digital revolution arrives.
Trading at 18 times next year's forecast earnings, the stock is still expensive. However, it remains better placed than most of its competitors to take advantage of the changing advertising landscape. The major short-term downside risk to its share price is that Mr Bolloré walks away. But in our opinion, the stock would be sure to rebound on the back of its strong potential. Buy.
Pinewood Shepperton
Our view: Buy
Share price: 237.25p (+18.25p)
After a torrid couple of years, the British film industry has been looking in much better shape over the past few months.
With Gordon Brown, the Chancellor, having committed to a raft of generous new tax breaks, film-makers can now hardly afford not to give the UK at least some consideration when deciding where to set up their next project. And if you're coming to Britain - one of Pinewood Shepperton's three world-class and historic venues has to be near the top of your list.
Having already played host to the latest James Bond movie this year, the company recently discovered that it has beaten off competition from New Zealand to stage the next film in Walt Disney's Narnia Chronicles, Prince Caspian. Furthermore, a deal with Morley Fund Management to help refinance its Shepperton studios over the next few years should provide an extra pull for potential movie-makers.
Although the company's valuation may sound a little steep - trading at over 25 times this year's forecast earnings - profits are only just coming back on stream after a terrible 2005. The company said yesterday that trading for this year is in line with expectations, sending its shares up more than 8 per cent. With prospects for the year ahead looking encouraging, now is the time to buy.
Park Group
Our view: Avoid
Share price: 18.5p (no change)
The management at Park Group has not quite known whether to cry or laugh over the past few weeks. While most businesses can only dream of their biggest competitor collapsing into administration, it quickly became clear in the wake of the demise of Park's biggest rival, Farekpak, that the aftershock could easily destroy its own business as well.
Like Farepak, which went bust last month, Park offers Christmas saving packages to low-income households - with clients making small monthly payments in return for high-street vouchers and hampers when December finally arrives.
The collapse of Farepak has had two opposite effects on Park. On the one hand, with many of Farepak's customers having lost hundreds of pounds, the Christmas hampers and vouchers business has got a bad name for itself. On the other hand, it has raised Park's profile considerably.
The former Everton chairman Peter Johnson, who heads up the board of Park, was quick to realise that there may be an opportunity in the current crisis.
Within weeks of Farepak's collapse, his company had pledged £1m to the Farepak victims, while yesterday - as the group announced a solid set of interim results - he said the company had begun exploring ways to ring-fence client money, ensuring that its customers could never suffer the fate of Farepak.
Nevertheless, it remains too early to say whether Park will snatch success from the jaws of failure. Investors should wait for some clarity. Avoid.
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