FTSE in-depth: City gambles on gaming tie-ups

 

The recent £1bn merger between PartyGaming and Austria's bwin, which created the world's largest online gaming group, was seen as the potential catalyst for a wave of takeover activity in the gambling industry.

Geoff Foster

Foster:

Gibraltar-based bookmaker 888 Holdings, which supplies services to Caesars Entertainment Corporation, is reckoned to be the likeliest bid target and it was again yesterday subjected to much rumour and speculation that its days of independence are numbered.

A well-above-average 8m-plus shares changed hands as they touched 36.25p on talk of a 60p a share bid from bigger rival Sportingbet (0.75p off at 46.5p) before closing flat at 36p. There was also some late gossip that 888's management is also considering taking the company private.

Betting shop giant Ladbrokes (1.3p easier at 148.45p) in April walked away from a £200m-plus bid for 888, the second time in four years that a deal had collapsed. 888's controlling Israeli Shaked and Ben-Yitzhak families apparently could not agree on a price.

During the abortive talks, 888's chief executive Gigi Levy stepped down to 'pursue other interests', a development which many said left 888 even more vulnerable to predatory interest.

Sportingbet is on the acquisition trail. Following the termination of its talks with Unibet, the Swedish operator, it confirmed it was interested in acquiring Australian betting operator Centrebet.

Swallowing Centrebet would give it 33% of the Australian online betting market. But industry sources suggest getting into bed with 888 would be a lot more exciting.

Down 63 points at one stage following overnight weakness in Asian markets and the shock arrest of International Monetary Fund chief Dominique Strauss-Kahn, the Footsie rallied strongly to finish only 2.18 points lower at 5,923.69. Wall Street helped by trading 20 points up at the outset.

Firmer metal prices helped Antofagasta advance 43p to 1184p and BHP Billiton 52p to 2391.75p. Kazakhmys rose 29p to 1241.5p after announcing its intention to seek a secondary listing for its shares on the Hong Kong stock exchange by the end of June.

Reports of a pending cautious circular left temporary power supplier Aggreko 61p off at 1750.5p. Continuing concern about the downturn in the advertising market dragged Britain's Got Talent broadcaster ITV 1.3p lower to 68.1p.

Persistent speculative buying fuelled by a report the board is considering the exit of the loss-making Comet division helped Kesa Electricals climb 9.7p, or 7pc, to 150.75p.

Activist investor Knight Vinke sits on 18.8% of Kesa's equity and has been putting pressure on its management to address the group's deteriorating trading performance.

Rival PC World and Currys electricals group Dixons Retail sparked 2.25p higher to 18.4p ahead of tomorrow's analysts' presentation.

Department store group Beale, in which entrepreneur Andrew Perloff's Panther Securities owns 29.9%, closed flat at 36p ahead of today's EGM at the Norfolk Royal Hotel in Bournemouth.

Shareholders are expected to approve the acquisition of 19 department stores from the Anglia Regional Co-operative Society. A re-rating should follow because Beale's chief executive, Tony Brown, formerly of ASDA and BhS, is well respected and considered to be the man to take the enlarged group forward during a difficult trading environment.

Profit-taking following a solid trading update left social housing and domiciliary care group Mears 5p cheaper at 254.5p. Altium Securities upgraded to buy from hold after the group revealed £120m of new contract wins including a social housing repair and maintenance contract with Bedfordshire Pilgrims Housing Association and Dover and Leeds Councils.

MCB Finance soared 11p to 40.5p after the consumer finance company which provides flexible credit to retail customers in Eastern Europe said it expects profits for the current year to exceed market expectations. It has also appointed Merchant Securities as its nominated adviser and stockbroker.

Oil equipment services group Cape shed 6.5p to 500.25p after saying overall trading has been in line with expectations, with activity levels and operating margins consistent with the same period last year.

As expected, £3.5m of non-recurring corporate charges have been incurred in the year to date including the £2m cost of moving its share quote from AIM to the main market.

Carbon and clean energy project company Camco firmed 0.63p to 17.38p after announcing the construction of its first US animal waste to energy project. The largest dairy biogas farm in the US will produce energy from methane derived from cow manure.