Market Report: Ladbrokes tipped as a takeover candidate

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The Independent Online

Ladbrokes is known to be considering a possible bid for the online gaming group 888 Holdings. But, if you believe yesterday's dealing-room gossip, the bookie could itself be on the receiving end of a takeover approach in the near future.

Dealers reckon Ladbrokes is being stalked by a private equity house. Earlier this year, Hilton, which then owned the group, spurned a series of offers for the business which runs a chain of 2,000 bookmaking shops alongside online and over-the-phone services.

CVC Capital Partners, BC Partners and Blackstone are thought to have been among the private equity players who showed an interest in Ladbrokes back then. Their offers are said to have valued the company at up to £3.5bn. At yesterday's close of 396.5p, up 4p, the group was valued at only £2.5bn by the stock market. Analysts believe a fresh offer of around £3.5bn will be difficult for Ladbrokes shareholders to resist.

Meanwhile, the wider FTSE 100 finished the week on a negative note, falling 17.9 points to 6,122.1. This was the fourth session in a row that the blue-chip index has lost ground with dealers blaming the weakness of the US dollar for yesterday losses. Close to half the companies that make up the FTSE 100 report in dollars, while most are heavily exposed to the American economy or currencies correlated to the greenback. Among the worst performers were Experian, 12.5p lower at 600.5p, Old Mutual, down 2p at 180p, and Shire, off 14p at 1,025p.

Kingfisher lost 6.75p to 249.75p after Deutsche Bank downgraded its recommendation on the DIY retailer to "sell" from "hold". The German broker said Kingfisher shares have risen by 13 per cent in the past three months primarily due to hopes of a rapid recovery at its B&Q business. However, it believes profits at B&Q will struggle to stage the rebound the City is hoping for. As a result, Deutsche cut its Kingfisher profit forecast.

Bearish broker comments also took their toll on Lloyds TSB. A downgrade to "equal weight" from "overweight" by Morgan Stanley pushed shares in the bank 7p lower to 554.5p. The US broker said it is worried about Lloyds' heavy exposure to the UK's unsecured credit market where conditions look to be deteriorating.

Trading Emissions rose 7p to 127.5p while Domestic & General added 17.5p to 1,051.5p after brokers cleared a large institutional seller from both stocks. The seller is believed to have been HSBC, which is in the process of liquidating a number of its investment funds.

Ashmore ticked 4.75p higher to 208.75p after Goldman Sachs started coverage of the emerging market asset manager with a "buy" rating. The US broker believes the amount of cash allocated by Western pension funds for investment into developing countries is set to grow and that this will greatly benefit Ashmore .

Isotron dropped 35.5p to 762p after it emerged that Synergy Healthcare had secured control of 35 per cent of the medical equipment company. Synergy approached Isotron with a 750p cash-and-shares offer last month. In its wake, Isotron shares raced ahead on hopes of a counter-bid from one of its US peers. Given the support for Synergy's offer, analysts now believe such a scenario is unlikely.

Renold continued its advance after Hanover International, the US activist investor, disclosed the purchase of 1 million shares, taking its total holding to 10.7 million or 15.5 per cent. Hanover has made a killing in the past from investments in Elementis, the speciality chemicals group, and 4imprint, a promotions company. It looks to be about to do the same at Renold, 2p higher at 100.5p yesterday. Shares in the maker of industrial chains have doubled since the summer.

Carter & Carter rose 15.5p to an all-time high of 920p ahead of next week's annual general meeting. The management is expected to give a trading statement at the gathering and, judging by the recent performance of the stock, it is unlikely to disappoint. The group is the UK's leading provider of vocational training. It floated in February of last year at just 235p and has seen its shares rise by nearly 300 per cent .

Phil Carter, who founded Carter & Carter and is its chief executive, had another success on the stock market yesterday. He disclosed the purchase of 200,000 shares in Biofutures International at 26p, taking his stake to 11.4 per cent. Biofutures plans to become a major producer of bio-diesel in Malaysia. Its stock closed 1p higher at 27p.

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