Market Report: City players pile into Eidos as bid talk intensifies
Tuesday 03 August 2004
Eidos, the creator of Tomb Raider star Lara Croft, has always been a favourite among City punters and yesterday they piled into the computer games developer in the hope of a bid for the group.
Eidos, the creator of Tomb Raider star Lara Croft, has always been a favourite among City punters and yesterday they piled into the computer games developer in the hope of a bid for the group. Dealers reported buying by a number of "hot players" said to among those who correctly predicted the bid for Abbey from Banco Santander. Such talk left Eidos up 10.5p higher at 107p on the day.
A bid for Eidos is without doubt a possibility. The company in effect hoisted the "for sale" sign in June after a massive profits warning sent its shares crashing. It complained that its small size prevented it from developing enough new products for the next generation of games consoles and so initiated a strategic review. Four years ago Eidos abandoned merger talks with its French rival Infogrames but recent speculation has centred on American players Activision and Electronic Arts as the most likely buyers of the company.
Whether the "hot players" get it right on Eidos only time will tell. Although they made a lot of money on Abbey they, more recently, lost a lot betting on a takeover of MFI. Back in May, Eidos was rumoured to have cost Robert Bonnier, the former Scoot.com boss, dearly. Mr Bonnier is said to have piled into the stock, building up an 8 per cent holding, shortly beforethe group's second profits warning of the year. He is rumoured to have lost up to £7m as a result.
Just after the close of business, Eidos released a statement about its Championship Manager 5 game, which will soon be available on the PlayStation and Xbox consoles. Elsewhere in the sector, Argonaut Games slumped 1.37p to 4.5p on the back of a profits warning. Argonaut said it would report a loss of about £6m for the year to end-July 2004, after suffering delays to the signing of a number of new development contracts.
In the FTSE 100 index, Man Group , the hedge fund group, continued to slide. It fell 58p to 1,250p. British Airways lost 6.5p to 224.5p as analysts pointed out that the price of jet fuel is at a 14-year high. Fuel is usually an airline's second-largest cost after labour. BA's rival easyJet fell 1.25p to 146.75p and Ryanair lost €0.1 to €4.4 ahead of today's first-quarter figures.
Matalan rose 1p to 210.5p, although Arbuthnot Securities was heard advising its clients to ignore recent talk of a bid for the discount retailer from the US giant Wal-Mart. Advising investors to use the strength in Matalan's share price as a selling opportunity, the broker said: "We think there is weak rationale behind such a move by the US group."
Wal-Mart has 20 per cent of the value-clothing market, the same as Matalan, according to Arbuthnot, and all acquiring Matalan would do is give it an alternative out-of-town presence, which could cannibalise its existing stores. The broker believes investors should switch out of Matalan and into Woolworths , down 0.75p to 42p.
Warner Chilcott , formerly known as Galen, jumped 29p to 629p in response to Friday's late breaking news that the company had won a key patent victory. A US court found in favour of the Northern Irish group and its partner in a battle against a rival manufacturer which wanted to start producing a copycat version of Warner Chilcott's Sarafem antidepressant.
Lower down the pecking order, Multi Group jumped 0.37p to 6.12p after selling its tool hire business to Speedy Hire , unchanged at 420p, for £7.1m. Multi now becomes a cash shell and its management said they are looking at a number of acquisitions via which they can re-launch the company.
Multi was close to collapse at the end of last year and was bailed out thanks to a refinancing package backed by the serial entrepreneur Bob Morton. As part of the package, Mr Morton took a 56 per cent stake in the group via an equity issue at 1p. He will certainly be happy to see Multi's shares close where they did yesterday.
Victoria Oil & Gas soared 10p to 35p amid evidence of stake building in the company. Altima Partners disclosed an 8.5 per cent stake while Ferlim Nominees announced a 5 per cent holding. Dealers were unsure who is behind the two companies but indicated that further buying by the two is probable.
Character Group put on 1p to 54p after its chairman, Richard King, bought 25,000 shares at 55p. Meanwhile, Kirankumar Shah, its finance director, announced the purchase of 25,000 shares at 49p.
There was also director share buying at Patientline , a penny better at 94.5p. Peter Colderidge, the finance director, acquired 10,000 shares at 92.5p.
Moneybox ticked 0.5p higher to 42p on news that the cash machine operator had extended its relationship with GE Money Bank. The broker Numis Securities believes the deal will help Moneybox consolidate its position in the German market.
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