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Takeover news boosts stocks despite more economic woe

Published: 13:40 25 Jul 2016 BST

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Takeover news and talk propped up London shares on Monday in the wake of more dire UK economic data.

The FTSE 250 Index soared nearly 160 points to 17143 as Rank Group PLC (LON:RNK) and 888 Holdings PLC (LON:888) said they were considering an offer for William Hill PLC (LON:WMH).

William Hill has had a tough time of late, announcing the departure of its chief executive last week after a bad run of sporting results at the Cheltenham festival and elsewhere.

After news of the approach broke, shares in the bookie bounced 6.38%, or 20p, to 333.6p.

Broker Liberum Capital said in a note: “As with other mega mergers in the sector recently, synergy benefits will be the key.

“The central case points to a valuation of around 350p, but with no certainty that a bid will materialise/be successful, we retain our target price of 319p for now.”

If it happened, the tie-up would be the latest in a string of such moves in the industry.

Paddy Power has joined forces with Betfair to form Paddy Power Betfair (LON:PPB), Ladbrokes PLC (LON:LAD) is teaming up with Gala Coral and GVC Holdings PLC (LON:GVC) bought Bwin.Party in February.

The FTSE 100 Index pared early gains to stand 0.19 points up at 6730.67 after July’s CBI Industrial Trends Survey showed manufacturers were preparing for torrid trading, despite the weaker pound.

Back in equities, shares in arcade game retailer Game Digital PLC (LON:GMD) sparked 10.5% to 73.74p amid idle takeover rumours.

In small caps, Cloudbuy PLC (LON:CBUY) stormed 44% ahead to 6.84p for no apparent reason, although it said on Friday that projects should begin generating revenue in the second half.

Industrial x-ray screening system supplier Image Scan Holdings Plc (LON:IGE) rose 21% to 2.87p on news of a £750,000 order from an unidentified territory in Asia.

Coal of Africa Limited (LON:CZA) ticked up 5.5% to 3.43p after it reported regulatory progress at the Makhado coking and thermal coal project in South Africa.

Mariana Resources Ltd was also on the up by 11.5% to 55.75p as it reported increased high-grade gold-copper resources and a maiden zinc resource at its Hot Maden scheme in Turkey.

But NetDimensions (Holdings) Limited (LON:NETD) slipped 26.1% to 43.25p as the supplier of performance, knowledge and learning management systems reported lower-than-expected first-half sales due to delays in deal roll-outs.

Advanced materials supplier Versarien PLC (LON:VRS) backtracked 3.8% to 10.1p on news of a fully-subscribed placing to raise £1.1mln.

Corporate reports were relatively limited on Monday ahead of an expected deluge later in the week.

But Ryanair Holdings Plc (LON:RYA) was flying 5.8% higher at €11.53 a share as first quarter profits rose 4% to €256mln on a 2% increase in revenue to €1.65bn. Passenger numbers in the three months to June 30 lifted 11% to 28 million.

Ryanair said it was planning to switch its growth drive away from the UK following the country’s vote to leave the EU.

Sausage maker Cranswick plc (LON:CWK) sizzled up 1.2% to 2361p after revealing the £15mln sale of its sandwich arm to Greencore PLC.

The top Footsie winner was Barratt Developments PLC (LON:BDEV) up 2.3% to 420.6p.

The biggest loser was Randgold Resources Ltd (LON:RRS) down 1.5% to 8715p.

Preview at 6.55am

The FTSE 100 is set to start the trading week in subdued mood ahead of meetings by the US Federal Reserve and Bank of Japan later this week.

The spread betters are predicting the index of blue-chip shares will open a modest two points higher at 6,732.48.

The G20 gathering of finance ministers held in China over the weekend reflected the mood of caution post-Brexit that is likely to inform the thinking of central bankers as they ruminate on fiscal policy.

But while the Fed chair Janet Yellen and her team are likely to take no action on interest rates, the BoJ looks set to be more decisive in its approach to reviving growth.

“Japanese policymakers have been wrestling with a sclerotic economy for years now and with interest rates already in negative territory speculation has been rising that the next step could be direct monetisation in the form of ‘helicopter money’,” said Michael Hewson of CMC Markets.

“This still remains a risky next step simply because it’s never been done before and while Bank of Japan Governor Kuroda has gone to great lengths to rule it out, he also ruled out the prospect of negative rates three days before implementing them, hugely damaging his credibility in the process.”

In Asia the markets traded modestly higher, although the volumes were subdued. The Nikkei 225 was up 0.3%, while the Hang Seng and Shanghai Composite were up 0.25% and 0.2% respectively.

Back in the UK, it is expected to be a busy week for corporate news with updates from BSkyB,ITV (LON:ITV) and GlaxoSmithKline (LON:GSK).

*Brent crude is currently trading 5 cents lower at US$45.64 a barrel.

*Gold is up US$1.60 an ounce at US$1,325.

*The pound is worth US$1.3109.

Bid rumour: Gambling groups Rank Group and 888 Holdings are preparing a shock double bid forWilliam Hill, Britain’s biggest bookmaker – Telegraph.

City Headlines

*The global oil market has a huge overhang of crude that could take up to two years to clear, according to Ian Taylor, chief executive of Vitol, the trading firm – Times.

*This week Deutsche Börse will announce the result of its shareholder vote on the controversial merger with the London Stock Exchange, with the deal likely to be approved by the required number of investors – Times.

*Guardian Media Group will this week reveal a higher than expected full-year operating loss of £69 million as the owner of the Guardian newspaper battles to bring its finances under control – FT.

*BHS was subject to “systematic plunder” by former owners Sir Philip Green, Dominic Chappell and their respective “hangers-on”, according to MPs, leading to the collapse of a company that once employed 11,000 people – Guardian/Mail

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