HRG no longer acquisition target?

Shares in Home Retail, the owner of Argos and Homebase, finished 1.35p higher at 75.15p on Tuesday. But stockbroker Panmure Gordon played down recent talk of a possible takeover, and suggested the company could close more Argos stores and might need a rights issue. Analyst Philip Dorgan said:

“We no longer think of Home Retail as an acquisition target. Time has marched on and the costs of repositioning, together with the risks, suggest a sizeable poison pill, which would put a potential buyer off.”

He repeated his sell rating and cut his target price from 95p to 60p:

We are over 20% below pretax profit consensus for the current year, because we see continued significant pressure on Argos's major categories throughout the Christmas trading period. At 60p, the shares would trade on 5.5 times EBITDA – which is not cheap – and we think that the company will need to go through a costly, hard and painful restructuring operation. This will involve significant store closures at Argos, in particular, and possibly a rights issue.

Source : Nick Fletcher - The Guardian’s Market Forces Blog
www.guardian.co.uk/business/marketforceslive/2011/nov/22/us-defence-cuts-bae-systems?INTCMP=SRCH