Nervousness Surrounded trading in Innovation Group and Regus yesterday but it had nothing to do with the underlying performance of the two companies. Investors fear that Robert Bonnier, the former chief executive of Scoot.com, may need to raise money by selling down his significant shareholdings in both group's after taking a very large hit from Thursday's meltdown at Eidos.
Eidos shares dropped 30 per cent after it issued a profits warning, and a further 6.75p to 113.75p yesterday. This is very bad news for Mr Bonnier who, via a series of spread bets, has built up his 8.2 per cent interest in the computer games developer at prices well above 155p. Dealers estimate that the former Scoot boss could be down by as much as £7m as a result of his position.
In order to fund this loss, market professionals reckon he will have to cash in on his holdings in Regus and Innovation Group. He controls 8.9 per cent of Regus and 18.4 per cent of Innovation via ICE SAS, a Paris-based investment vehicle. Unlike his foray into Eidos, Mr Bonnier has done very well from Regus and Innovation. Shares in Innovation have more the doubled since he started buying into the software group while Regus' stock has quadrupled. Hence, Mr Bonnier has plenty in the way of paper profit, which he could use to subsidize his losses at Eidos.
But should cash in these profitable holdings, it is bound to weigh on the share prices of the two companies in the near term. It was this worry that sent Regus down 4p to 61p and Innovation 0.75p lower to 33p yesterday.
Altium Capital argued that Eidos' profits warning also spells bad news for Game Group, down 1.75p to 61.25p. Eidos not only talked of soft demand in its markets but also complained of weaker than anticipated orders of its Hitman: Conflict title. Game, the computer software retailer, is also likely to be negatively impacted by this, especially as Hitman: Conflict was expected to be one of the top titles to be released on the market this year.
The FTSE 100 had a quiet session. It closed 2.7 points better at 4,431. Rio Tinto was the top performer in the index, rising 35p to 1,285p, thanks to bullish comments from Merrill Lynch. The US broker upgraded its rating on Rio to "buy" from "neutral" and argued that the 19 per cent decline in the company's share price since the start of the year is far too great. "After listening to Leigh Clifford, the chief executive, at a recent mining conference, we see no signs of a downturn in Rio's core businesses," Merrill told its clients.
Retailing giant Next, up 2p better at 1,412p, disclosed the sale of 20,000 shares at 1,417p by David Keens, the finance director. Rumours that Daily Mail & General is looking to sell 29 per cent stake in GWR sent shares in the radio group 5.25p lower to 242.5p. The disposal would raise around £100m for the DMGT, which is still in the bidding for The Daily Telegraph.
Intertek dropped 6.5p to 530p as traders responded to Thursday's late breaking news that David Allvey, a non-executive director, has sold virtually his entire holding. Mr Allvey sold 95,000 shares at 537p and retained a stake of just 5,000. Shares in the equipment testing specialist remain within a whisker of their all time high, even after yesterday's drop.
Lower down the pecking order, Burren Energy rose 17.5p to 257.5p despite whispers that some of the oil explorer's early stage backers are looking to sell down their holdings. Local Radio Company surprised many in the City with a strong maiden session. The company started at 95p, the price at which it raised £47m, and closed at 100.5p. Many had argued that at 95p the company was significantly overvalued.
Medical Marketing International gained 3p to 54.5p on whispers the group has extended its existing deal with the National Blood Service. This will result in extra revenues for the company. A lack of drilling news left Sterling Energy 0.37p weaker to 13.75p. NeTeller added 2.5p to 176p on talk that the European platform the online money specialist set up in February, has won two major contracts.
And finally, Dynamic Commercial Finance soared 20.5p to 105p as a 29 per cent stake crossed the market at 107p. The holding belonged to Unicorn Asset Management, the fund management group run by star manager Peter Webb. He is believed to have sold the stake to GLE Development Capital, a private equity firm, which is now tipped to table an outright bid for the rest of Dynamic Commercial.
GLE owns a company called IGF, which like Dynamic is in the factoring business, and is said to be keen to merge the two players together. Meanwhile, Peter Webb seems to have secured an amazing deal with GLE. Should the private equity house buy Dynamic outright at a price above 107p, GLE has agreed to pay Unicorn the difference.Reuse content