Shares digital

Sales might not be going to plan at Woolworths (WLW) but a jewel in the company’s otherwise tarnished crown could be set to give the shares a massive boost. Speculation is mounting that it may sell 2 entertain, its 40/60 joint venture with the BBC, which analysts believe could be worth £180 million-£200 million to the company.

This business has the rights to DVDs for popular BBC programmes such as Planet Earth, Dr Who and Top Gear, and generates sales over £200 million. Shares have plummeted from highs of 34.25p in 2007 to lows of 8.17p but have risen 32% in the last few weeks to 10.75p on the speculation. At this price the market cap is just £140 million, less than the potential value of 2 entertain.

Unsurprisingly analysts believe the shares have further to go with Nick Bubb of Pali International and Rhys Williams of Arbuthnot commenting that the sum of its parts is worth more than the share price. Bubb has a price estimate of 13p which represents a 21% premium over its current level.

Shares says: Woolworths

is in danger of selling the family silver to fund losses from the stores. Such a strategy is fundamentally unattractive.

by: John Marshall