The odds are against a deal being agreed for the acquisition of bookie William Hill PLC (LON:WMH), according to Investec.
The broker reckons the robust nature of the rejection statement means that the chances of suitors 888 Holdings PLC (LON:888) and The Rank Group PLC (LON:RNK) winning round the board of William Hill to the idea of a three-way merger are “slim to none”.
Investec has a ‘reduce’ recommendation on the bookie’s shares and is sticking with its 286p target price, arguing that the bidders would find it difficult to fund a higher price than the 352p offer that is currently on the table.
“We believe William Hill is now ‘in play’, and may attract attention from other possible suitors. If no new bid arises before 21st August, there is an argument that William Hill should trade within the range of its pre-bid speculation value – between 275.1p and 313.6p (20th July-22nd July),” suggested analyst Alistair Ross.
Ups and downs in the resources sector
The resources team at Deutsche Bank has been doing a bit of target price tweaking in the wake of announcements yesterday from miners Antofagasta PLC (LON:ANTO) and BHP Billiton plc (LON:BLT) and oil play Cairn Energy PLC (LON:CNE).
Antofagasta’s target price is bumped to 585p from 575p, as the company’s interims showed the success of the company’s cost-cutting drive.
Exane BNP Paribas also raised its target price for FAGs, but sticks with its ‘neutral” position. Following yesterday’s positive reaction to the interims, the French finance house has increased the target price by 9% to 545p.
BHP Billiton needs to keep digging, said Deutsche Bank as it trimmed its target price to 1,230p from 1,240p, despite all divisions of the Anglo-Australian leviathan reporting earnings before interest and tax (EBIT) above the bank’s expectations.
“With no new project approvals planned until at least 1H CY17 [first half of calendar 2017], and a further reduction in capex [capital expenditure] guidance, the focus this fiscal year is clearly on reducing debt in our view while keeping an eye out for acquisition opportunities,” said Deutsche’s mining team.
Sector commentary: BHP and Anto's contrasting fortunes highlight mining's insecurities
Cairn Energy’s target price was inflated to 240p from 230p, with Deutsche suggesting that Senegal is the company’s best bet for discoveries that will move the dial.
The rating remains ‘hold’ as “the current upstream environment offers no shortcuts to value realisation” in Deutsche’s view.
Barclays, meanwhile, said Cairn is “delivering on costs”, which is improving the cash flow outlook for the remainder of this year and all of next.
The bank remains ‘overweight’ on the stock, which trades at 208.4p, and has slightly increased is price target to 280p.
JP Morgan Cazenove is also overweight on Cairn Energy; its target price rises to 235p.
Shanta shunted higher
House broker finnCap has increased its target price for Shanta Gold to 20p from 12p in the wake of today’s interim update, though the increase has more to do with the broker increasing its gold price forecast from US$1,200 an ounce to US$1,300 an ounce, and adjusting its cable forecast to US$1.30.
“The period saw a critical restructuring of the company’s near-term US$25mln convertible note. US$10mln was repaid following an equity raise with the remaining US$15mln extended to April 2019. In addition, the company is in the process of arranging a US$5.25mln silver streaming deal. This is expected to close in Q3 2016," the broker noted.