Thus - The New Ashtead?

IT’S that time of year when we make predictions only to embarrass ourselves 12 months later. There are easy predictions, measured ones and the downright fanciful.
Before embarking on the more challenging, I am going for some quick hits.



First, the price to watch England play in the football World Cup this summer will be the best barometer of business health. At present, tickets for the best seats are trading at five times face value and rising. With record City bonuses being dished out in the coming weeks, that multiple will go even higher.

The indicator for the second half of the year will be the rush to watch the English cricket team attempt to retain the Ashes Down Under. Tickets go on sale on January 10 and, if you can get one, the return will outperform equities and even the soaring price of uranium.

If one of the recurring themes of 2005 was private equity, it will be even more so this year. We have already seen huge $10 billion leveraged “club deals” — where private players join forces. These included Hertz, Sungard Data Systems as well as Denmark’s top telecoms operator, TDC, last November.

Nothing is now out of their reach and, with hedge funds turning themselves into quasi-private-equity players, the action will intensify.

There will be a number of high-profile casualties among some of the private-equity buyouts, but the sheer amount of money available means they will quickly be overlooked.

Carphone Warehouse, the telecoms group, will enter the FTSE 100 and Charles Dunstone, its chief executive, will cement his reputation as one of the outstanding entrepreneurs of his generation. But it will not be plain sailing. The City will be surprised by the aggression with which BT defends its market position against interlopers as it launches new broadband services.

Equitable Life, the insurer, will try to break itself up but the deal could prove too complicated, and Vanni Treves will finally quit as chairman.

On the takeover front, Lafarge, the French aggregates giant, will buy Hanson. There will be a slew of activity in the utility sector. Southern Water and Thames Water, owned by Germany’s RWE, will end up in venture-capital hands.

If one of the big three overseas utilities — Eon, RWE and EDF — makes a bid for a British company, it will trigger a round of further bids, with Scottish Power and Scottish & Southern two of the most likely to go. This interest will mean that shares in United Utilities will close the year above 750p, compared with Friday’s closing price of 671p.

In the retail sector, Kingfisher will be bought by an American peer — Home Depot or Lowe’s. And both Justin King and Stuart Rose will make bullish predictions about how they will further improve J Sainsbury and Marks & Spencer.

Kingston Communications and Thus will be taken over as consolidation continues to sweep through the alternative-carrier sector. Sir John Bond, Vodafone’s incoming chairman, will be anxious to see chief executive Arun Sarin restore investor confidence quickly because the company could soon face an intriguing strategic possibility in America.

The continuing rapid decline in Verizon’s fixed-line business has cost the American telecoms giant a quarter of its market value in a year — despite the continuing strong performance of Verizon Wireless, in which Vodafone holds a 45% stake. Vodafone would dearly love to get its hands on the whole of Verizon Wireless, but so would Verizon itself. The slide in Verizon’s stock price gives Vodafone a chance to break this impasse. A Vodafone bid for Verizon, perhaps in league with private-equity houses, is a realistic possibility — but not while Sarin lacks wholehearted investor support.

Tiscali, the internet-service provider, will be taken over — possibly by Orange, which is keen to step up its converged fixed/mobile play in Britain, or even by BSkyB, which recently bought Easynet to get into the broadband market On the mining front, the big question is whether China will try to get its hands on the natural resources it desperately requires and, if it does, Antofagasta, the copper producer, will be high on its shopping list. The scale of change at Anglo American will also be much bigger than anyone has so far predicted.