Hobson: Is This Acquisition Value for Money?

THE WEEK: Morningstar columist Rodney Hobson wonders whether the boardroom is making too many acquisitions at packaging maker Bunzl

Rodney Hobson 15 December, 2017 | 12:49AM

While activist investors talk about the break-up value to be released from splitting companies apart, conglomerates continue to grow through acquisitions. Packaging maker Bunzl (BNZL) is firmly in the latter camp.

Does anyone there ever pause to think whether each acquisition is really value for money?

Its latest trading update wasn’t about trading at all, which is pretty much in line with the previous guidance. It was about the latest acquisition, Lightning Packaging, which distributes industrial packaging throughout the UK. This takes spending on acquisitions this year to a company record £600 million and as “the pipeline for acquisitions remains active” it is quite possible that the previous high of £327 million in 2015 will be doubled before the month is out.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Bunzl PLC1,923.00 GBX0.79
Dixons Carphone PLC76.55 GBX-0.26
Reach PLC81.00 GBX0.00

About Author

Rodney Hobson

Rodney Hobson  is a columnist for Morningstar.co.uk and author of several investing books, including The Dividend Investor and How to Build a Share Portfolio.

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