Monstermob rings up gain on bid approach

Shares in Monstermob surged 25 per cent yesterday after the mobile phone content developer said it had been approached about a takeover. Although it did not reveal the identity of the interested party, analysts said an opportunistic industry player could be behind the move.

Monstermob said the approach was indicative while talks were at a preliminary stage and subject to "material preconditions". Nevertheless, the news came as welcome relief to investors with shares adding a quarter in value to close at 70p.

Monstermob shares had collapsed to about 40p from a peak of 462.5p in September after a series of profits warnings. In June, it axed founder and chief executive Martin Higginson but worse came in July when changes to regulation in China related to mobile phone content wiped 50 per cent off its share price.

With the stock trading at only two times consensus forecasts for the year, one analyst described the shares as "ridiculously cheap", a view shared by Monstermob's management. Yet the company has struggled to regain credibility with institutional investors over customer service issues in the UK and regulatory worries in China, leading to speculation that a management buyout could be on the horizon.

Monstermob shares soared 35 per cent on Monday on rumours of a bid. Yet the approach was not led by Mr Higginson, still the company's largest shareholder, nor the chief executive Niccolo de Masi, leading to speculation that a private-equity company or an industry rival is looking to buy the company while its valuation is depressed.

Monstermob, a profitable and cash generative business, has a strong presence in Europe and emerging markets, notably in Asia. VeriSign, the US company that develops the Crazy Frog, has been mentioned as a potential bidder but declined to comment. Another mobile content company analysts have highlighted is Spain's LaNetro Zed. It also declined to comment.