Thursday, January 18, 2007

CSR rumour causes price surge

CSR Limited (ASX:CSR) shares continued to rise yesterday despite management denials of takeover talk. The company told the sharemarket it had no knowledge of a rumoured $A4.30-per-share offer. Nevertheless the shares jumped six per cent to their highest level since May 2006. The widely differing nature of CSR's main businesses - sugar, building materials and aluminium - in a time of intense private-equity activity has convinced many in the market that the company is an extremely likely takeover target by various players.

CSR Limited is a good company that is diverse enough to sit through the troughs in each sector of its operations. The only thing I don't like about it is that none of the operations seem to match up in anyway and therefore I wonder at managements effectiveness of essentially running three different businesses.

Speulators are again clutching at straws here as management has no idea about this takeover talk. Still this could get people thinking and it may lead to a takeover by a rival company or a private equity firm who may piece meal it and sell it off to other businesses at a later date.

Good Luck investing.

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