Market Report: Sportingbet plummets on return to the market

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The Independent Online

Although the future of online gambling remains in the balance, at least Sportingbet shareholders can now sell their shares, as long as they don't mind taking a hefty loss. Trading in the internet sports gambling group resumed yesterday morning, and the stock tanked 95p to 144p, a 39.8 per cent decline from the pre-suspension price and a two-year low.

Somewhat lost in the haze of last week's events, when the chairman Peter Dicks was arrested in New York, are the talks with its rival World Gaming. The takeover discussions, announced on Thursday morning and before Mr Dicks' arrest, implied a 104p-per-share value for World Gaming and analysts briefly considered it a good deal for Sportingbet. The market now clearly believes the talks will come to nothing, with World Gaming closing at 62.5p yesterday, half a penny better but still 40 per cent below the implied £56.6m offer value. What should have kicked off the first serious round of consolidation in the online gambling industry now looks like being consigned to the "where are they now?" file.

Another online gambling group, 888 Holdings, reports results tomorrow and even with many analysts predicting the company will easily exceed market forecasts, the shares remained unloved. One trader said: "Right now it will take an act of divine intervention to give this sector a spark." 888 declined another 3.5p to close at 142p.

In the blue chips, softening metal and oil prices dragged the FTSE 100 sharply lower, ending the session off 28.5 at 5,850.8. Seven out of the top eight fallers were mining stocks, as investors were spooked by talk of a rise in Chinese interest rates. Vedanta Resources led the way down with an 82p fall to 1,239p, while the fellow copper miner Kazakhmys lost 60p to 1,226p. The oil giants BP and Shell were also out of favour as crude futures hit $62.72 per barrel, shedding 8p to 583p and 29p to 1,823p respectively.

Reports that Scottish & Southern Energy and ScottishPower are deep in talks that could lead to the creation of a £20bn utility group failed to create much excitement. Most believe that if a deal is done it will take a long time to thrash out, although the broker Citigroup said merger talks could mean ScottishPower is lining up a "white knight" should it face a cash offer from another European rival. ScottishPower dipped 4p to 625.5p, while Scottish & Southern closed a penny firmer at 1,239p.

Mid-cap oil stocks also remained out of favour, although some traders were happy to pick up stock at lower levels. JKX Oil & Gas fell 18.75p to 258.25p, while Dana Petroleum lost 49.5p to close at 1,109.5p and Venture Production shed 33p to 709p.

Helphire, the non-fault accident management services group, reported in-line first-half numbers, and although the shares traded 10.5p worse at 384.5p, brokers were quick to upgrade full-year earnings targets. Teather & Greenwood and Altium Securities increased their forecasts for the second half, while Numis upped its price target for the shares to 450p.

Results from Ultimate Finance, due this morning, are rumoured to be well ahead of forecasts although the shares climbed only a quarter of a penny to close at 20.25p. The trade finance group has a market capitalisation of only £4m, but investors expect that to improve substantially once analysts digest the numbers.

Two of the best recent performers succumbed to profit-taking. Secure Design, the first Japanese company to list on AIM, has risen from a placing price of 47p two months ago to open at 210.5p yesterday. Although very little trade took place, the shares closed 32.5p lower at 175p. Bright Thing, which soared more than 500 per cent last week on good trade demand for its latest interactive DVD, fell 6p to close at 14.5p, still more than 340 per cent above where the shares traded last Monday.

Sports Café continued to surge after Friday's post-close confirmation that it is in talks that may lead to an offer for the company. The shares spiked sharply higher in morning trade on Friday, with some market makers raising suspicions about demand for them. Yesterday's 8.5p rise to 45.5p, about 76 per cent above where the shares opened on Friday, values the company at almost £17.5m. Rumour has it an announcement was supposed to come tomorrow confirming a 65p per share offer has been made, but at least two other suitors have made themselves known to Sports since Friday. With a bidding war on the cards traders expect the stock to have plenty of upside left.