Arla Foods: UK's top dairy

I think the facts are still what they were a couple of months ago - ARU is a low-growth business in a market which is already consolidated and highly competitive. It has a 30 September year end and to 30/9/07 the forecasts are a pre tax of £43.1m and eps 4.92p, then into 2008 £47.6m and 5.39p. That increase in the pre-tax is all the benefit to come from plant closures and disposals in the medium term; you simply cannot accurately forecast anything longer term than that as there are too many imponderables.

So the absolute, unavoidable fact is that a company like this isn't ever going to command a p/e ratio much over 14 - indeed, there's a case for saying the p/e shouldn't exceed 10. You can buy genuine growth stocks with more reliable prospects on a long-prospective p/e of under 14 in a great many cases.

14 times the long-prospective earnings per share is 75.46p and I still tell you that the offer, when it comes, will be a little under that level. There's the pension deficit to fund and many holders - including institutions - will be galloping for the door at 72p after seeing the shares down in the 40s earlier this year.

Unless you can make a sensible case for a company like this to have prospectively much higher and more reliable earnings, I really don't think it makes any sense to suggest higher prices, now or in 12 months time.