Market Report: Gambling traders moving into Bwin
Friday 05 October 2012
City traders like a gamble, right? Well there were certainly enough punters fond of a flutter to push Bwin.Party Digital Entertainment up more than 6 per cent yesterday. The online poker business has been the subject of spurious bid rumours over the past month and yesterday the rumours, on a predominantly quiet Thursday, increased.
Private-equity players or overseas competitors were suggested as potential bidders by hopeful traders. Its shares moved up 6.8p to 116.1p. The sector is waiting to see what happens with William Hill and GVC Holdings' interest in Sportingbet. The pair are rumoured to be coming back with a 60p-a-share bid. If Ladbrokes is well out of the race, some traders thought Ladbrokes might look at a merger with Bwin.Party instead. But with an extremely difficult market for online poker and various legislative and tax issues in Europe, not least Germany, other traders urged caution.
After falls in early summer, Bwin's shares have jumped more than 26 per cent in the past month. Ladbrokes moved up 2.4p to 177.9p.
Traders also turned their focus to the pest controller Rentokil, with very vague whispers of bidder interest pushing the shares up 4.25p to 87.25p.
Traders still not out of energy to add grist to the rumour mill found something to talk about in the restaurants and pubs company Mitchells & Butlers. Its shares fizzed up 8.6p to 301p as traders hoped there could be more stakebuilding.
Moving toward the end of a very quiet week characterised by low volumes, the benchmark FTSE 100 index gained 1.97 points to 5,827.78, despite the eurozone shenanigans rattling on with the Spanish debt crisis unresolved and the European Central Bank's press conference an anti-climax.
Chelsea's team may have just beaten Arsenal and FC Nordsjælland to continue their winning streak, but Roman Abramovich was not enjoying such a good result yesterday. Russia's biggest steelmaker and coalminer, Evraz, backed by Mr Abramovich, tunnelled towards the bottom of the Footsie after announcing it is almost doubling its stake in the digger Raspadskaya. Evraz is raising its share in the coal producer from 42 per cent to 82 per cent in an $800m (£500m) cash-and-shares deal. The move will give Evraz more control over the supply of the coking coal used to make steel, and is likely to make it the largest coking coal producer in Russia. But traders were unhappy, citing fears of over-exposure, and Evraz's shares lost 2.2p to 245.1p.
Back in July, Morgan Stanley said it was concerned that Evraz is assuming higher steel, coal and iron-ore prices than analysts forecast, which could affect its projected earnings. The broker warned: "Evraz's coking coal and iron ore prices in 2016 are 18 per cent and 25 per cent above our estimates."
On the subject of coal-miners, Nat Rothschild's long-suffering, debt-laden Bumi was in focus again. Its subsidiary PT Bumi Resources, Indonesia's biggest exporter of thermal coal, said it will bring in a strategic partner as part of a fundraising drive, and Liberum Capital warned "any rights issue undertaken … would be targeted to a new strategic shareholder and therefore be dilutive to [Bumi's] shareholders." Nonetheless, Bumi's shares lifted 1p to 161p.
Tate & Lyle got a boost from analysts at Credit Suisse and Investec, who raised their target prices to 750p and 700p. Its shares rose 12.5p to 687p.
On yer bike – the Olympics effect has taken hold of the nation. The bike and car-accessories retailer Halfords unveiled a new chief executive – Matt Davies from Pets at Home – and an update showing that sales raced up 14.7 per cent in the quarter. The shares rose 37.5p to 303.5p.
Aim-listed alternative-energy firm Ceres Power wasn't so lucky. The cash-strapped fuel-cell technology developer said it had been unable to secure sufficient funding to keep the business going and its shares crashed 6.7p to 2p.
Meanwhile the oil explorer and punters' favourite Gulf Keystone Petroleum revealed it will raise $200m via convertible bonds to develop its Shaikan block in the Kurdistan region of Iraq. Its shares retreated 19p to 211p on the news. But traders thought that the relatively insignificant fall, compared with its usual peaks and troughs, meant many of the sellers were being absorbed by the market.
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