Market report: Fading bid hopes sends gamer Eidos into a retreat

Click to follow

There was growing impatience among those hoping for a takeover of Eidos yesterday and as a result shares in the creator of the Tomb Raider star Lara Croft quickly headed lower.

There was growing impatience among those hoping for a takeover of Eidos yesterday and as a result shares in the creator of the Tomb Raider star Lara Croft quickly headed lower. By the end of the day they were down 7 per cent, or 8p weaker, at 106.5p. The scepticism about Eidos ever being bought seems to have been prompted by reports out of France that Ubi Soft Entertainment, a local computer games developer, is no longer interested Eidos.

At the start of the month, hot money flowed into Eidos betting on a bid for the group and sure enough soon afterwards the company admitted to being in talks with a number of parties. But according to the latest reports in the French press, and it is worth noting that newspapers across the Channel have a good record of being right about developments at Ubi Soft, the group's ardour has waned.

This does not surprise Dresdner Kleinwort Wasserstein. It believes that Eidos only has three or four attractive franchises and suggested that any potential buyer of the company is unlikely to pay more than 94p a share. The UK computer games developer has been effectively up for sale since June after a massive profits warning sent its shares plummeting. At the time, Eidos complained that its small size was preventing it from developing enough new products for the next generation of games consoles.

Whether one of Eidos' other international peers could be tempted into a bid for the group only time will tell. These include the US players Activision and Electronic Arts. Infogrames, which four years ago held merger talks with Eidos, is said to no longer have the firepower to execute such a deal.

Meanwhile, stocks on both sides of the Atlantic headed higher as the price of oil eased. In London, the FTSE 100 rose 36 points to 4,405. At the end of last week there was concern that the price of crude would breach the $50-a-barrel level, adding to the cost pressure on a large chunk of the global economy. According to Credit Suisse First Boston, high oil prices are most severely felt in the transport, chemicals, mining and packaging sectors. Therefore it was no surprise to see British Airways, up 6.75p at 219p, Bunzl, 7p better at 427p, and Anglo American, 26p higher at 1,284p, finish the day among the best performers in the blue-chip index.

Yet more positive broker comments pushed William Hill 7.5p higher to 548p. Morgan Stanley upgraded its rating on the stock to "overweight" from "equal weight" and set a 600p price target as it tipped the bookie to deliver substantial earnings growth the coming years. The US broker believes that next month's interim results will not only impress but could be a catalyst for upgrades to William Hill forecasts.

Persimmon, up 23p to 641p, is scheduled to post interim results today and investors piled into those in the house building sector viewed as the most attractive acquisitions for the group. Hence, Westbury gained 22p to 420p, Bovis put on 16p to 530p, Redrow added 13p to 354p and Bellway improved 20p to 730p. Persimmon, which has long been tipped as a consolidator of the sector, is expected to unveil a 25 per cent rise in profits to £190m.

Lower down the pecking order, Manganese Bronze added 8p to 160.5p as it emerged that Toscafield, the investment vehicle of the hedge fund manager Martin Hughes, had upped its stake in the taxi maker to 16 per cent from 12 per cent. Toscafield is believed to have acquired the shares from SVG Capital, the Schroder Ventures spin off, and gossips reckon it might be keen to flush out a bidder for Manganese Bronze. TTP Communications added 4p to 55p on talk the group is close to securing a large contract for Edge technology.

TT Electronics improved 4.5p to 168.5p on whispers of strong trading at the group. Demand for the company's products is said to be well ahead of that seen last year and brokers may well soon have to upgrade their expectations for earnings at the group. Something of a buzz also surrounded Xaar, 3p better at 94.5p. Word has it the company is enjoying strong trading and has benefited from its recent participation in a trade fair.

Innovation Group, the software specialist, marked time at 25.75p as two large blocks of shares, one of 11 million and one of 10 million, crossed the market at 26p. British Energy, unchanged at 19.5p, disclosed that UBS had taken a 6.3 per cent stake in the electricity generator. Dealers reckon the holding is likely to be supportive of the planned restructuring of the company.

Finally, Trading Sports Exchange Systems continued to retreat, falling 6p to 24.5p. The group's shares traded as high as 70p earlier this month as word spread that Terry Ramsden, the millionaire entrepreneur, is about to take a holding in the company but have been in retreat since it emerged that he would pay just 15p a share for a stake.

Market Movers

Tomkins 259p (up 7.5p, 2.9 per cent). Dresdner Kleinwort Wasserstein upgrades to "hold" from "reduce" ahead of interim results from the group later this week.

Laird Group 319.75p (up 14.75p, 4.8 per cent). Buys Centurion Wireless Technologies for £106m and sells its US plastics business for £40m.

Biofuels Corporation 117p (up 14p, 13.6 per cent). Toscafield, the investment vehicle of the hedge fund manager Martin Hughes, takes a 9.2 per cent stake in the company.

Micap 48p (up 5p, 11.6 per cent). Makes a deal with Bioprogress covering its smoking cessation products.

ComProp 137p (up 13p, 10.4 per cent). Receives bid approach from CI Traders valuing the group at £51m or 144p a share.

Warner Chilcott 610p (up 10p, 1.6 per cent). Announces that the US Food and Drug Administration has approved its Femtrace product for the treatment of menopause.

Singer & Friedlander 266p (up 4.75p, 1.8 per cent). Unveils strong rise in its first-half results and that John Hodson, its chief executive, is to be replaced by Tony Shearer, its finance director.

Iomart 56.5p (up 2.25p, 4.6 per cent). Signs reseller agreement with BT Group.

ARM Holdings 81.75p (down 18.75p, 18.7 per cent). Unveils purchase of Artisan Components of the US for £500m and says that further acquisitions could be in the offing.

International Power 132.75p (down 14.25p, 9.6 per cent). The stock goes ex-rights.

Galleon Holdings 0.26p (down 0.14p, 35 per cent). The company says it knows of no reason for the recent weakness in its share price.

Lloyds British Testing 14.25p (down 1p, 6.6 per cent). Posts a loss for the first half of its year and warns that the second half will not meet expectations.

BP 488.75p (down 0.75p, 0.2 per cent). The falling oil price holds the stock back.