MARKET REPORT: Takeover on the cards at Monitise

By Geoff Foster for MailOnline
Updated: 15:46 EDT, 31 October 2011

It was a day for stock market investors to throw caution to the wind and look outside the big boys for some action.

Buyers piled into British mobile phone banking and payments company Monitise, 2.75p higher at 38p, on hearing that Visa Europe – which is owned by an alliance of more than 4,000 European banks and controls the brand of credit card giant Visa Inc in Europe – has forked out £24.7million for an 8.8 per cent stake in the company at 35p a share, a move which many believe could be the precursor to a full-scale takeover bid.

In the meantime, Visa Europe’s chief executive Peter Ayliffe has joined the Monitise board.

Takeover in the air: It was a day for stock market investors to throw caution to the wind and look outside the big boys for some action

Visa Europe’s relationship with Monitise began back in February with an exclusive agreement to develop and supply mobile payment services for Visa Europe’s 4,000 members and financial institutions.

At the time, Monitise already had a similar deal with Visa Inc, its largest shareholder with a 14 per cent stake, covering the rest of the world.

Monitise has also bought out Fidelity National Information Services Inc’s 51 per cent share in Monitise America’s joint venture. Canaccord Genuity’s target price is 43p as the proceeds from Visa Europe’s investment raises its year-end net cash estimate to £31million from £7million.

Earthport, the global payments provider, firmed 0.5p to 18.5p amid whispers that Western Union, the US financial services and communications business, could acquire a strategic stake.

Earthport recently announced it will provide payments processing capabilities for a Western Union service which will allow people to send cash directly to any bank account in more than 35 countries.

Highly speculative Earthport is said to be thriving under new management and dealers hear that annual results due later this month will prove a lot better than expected.

US-based bio-refining company GTL Resources soared 22p or 29 per cent to 96.5p in response to an agreed £32million or £1 a share cash offer from marine firm Siem Kapital and fund manager North Atlantic Value. GTL produces more than 1m gallons of ethanol per year via its subsidiary Illinois River Energy.

Investment company Merchant Securities climbed 4.5p to 21.5p following a recommended 22p a share cash offer from Sanlam Private Investment Holdings, a leading South African financial services group.

Despite yesterday’s hefty 158 point decline to 5,544.22, the Footsie still recorded a gain of 8.11 per cent in October for its best monthly performance since July 2009.

Last week’s eurozone leaders’ agreement on the outline of a euro rescue package lacked significant detail and dealers now fear implementation could be some way off. 

Profits were therefore taken, while sentiment was not helped by news that brokerage firm MF Global had filed for bankruptcy. Wall Street lost 140 points in early trading.

After Zhang Changfu, vice chairman of the China Iron and Steel Association, said that mills were unwilling to stockpile resources while demand is low and prices are high, precious metal prices fell dragging shares of heavyweight miners sharply lower.

Vedanta Resources lost 126p to 1277.5p, Kazakhmys 89.5p to 927.25p, Xstrata 87p to 1045.25p and Antofagasta 88p to 1166.5p.

Rio Tinto plummeted 235p to 3385.25p. Buyers returned to drug delivery technology company SkyePharma, 12p better at 61p, on hearing that the US Food & Drug Administration has approved the new drug application for Exparel, used in the management of post-surgical pain.

Eros International, the Indian film entertainment company, featured a gain of 7.5p at 258.5p after announcing a record-breaking opening week-end for its latest film release, Ra.One.

It broke all Hindi box office records with the biggest ever gross collections of £22million worldwide. There are three major releases still to come in the fiscal year. A shock profits warning left Charles Taylor Consulting 14p lower at 132p.

The insurance consultancy firm said full-year profits will be below expectations as higher costs hurt its management services division.

Electrical equipment group Stadium blew a fuse at 61.5p, down 16p, following a disappointing trading update.

Cleantech company Energetix improved 0.75p to 31.5p on news that its TC3 product, a cleantech replacement for lead/acid batteries, has been given Type Registration by National Grid.

Cenkos this is a key stage for the company as it moves out of trial sales phase and into full volume commercial sales.