Merger chatter creates mixed fortunes for bookies’ shares
AUSTRALIAN bookie Crownbet was caught in the middle of a merger love triangle with UK firms William Hill and Paddy
Power Betfair yesterday as the spate of consolidation deals in the gambling sector saw the two companies fighting for a suitor.
Just hours after William Hill confirmed it was in talks over merging its Australian subsidiary with Crownbet, reports surfaced that Paddy Power was also negotiating with the Melbourne-based bookie over a deal.
Deal-making among betting firms has transformed the industry in recent years but GVC’S takeover attempt of Ladbrokes Coral was recently shelved due to the uncertainty created by a government review.
Canaccord Genuity analyst Simon Davies argued that a deal “makes sense” in William Hill’s case, adding that the bookie’s foray into Australia has been “fairly disastrous”. Its Australian business only represents 6pc of its profits but that is likely to come under pressure from the impending credit betting ban and increased tax.
While Paddy Power was propelled to the top of the FTSE 100, climbing 275p to £88.10, William Hill shares were less enthusiastic, dipping 1.7p to 282.1p.
Elsewhere, consumer goods giants Reckitt Benckiser, Unilever and Diageo were in demand after taxes on imported goods in China on a range of products were lowered from an average of 17.3pc to 7.7pc. The ministry of finance said the changes were designed to make goods in the Asian powerhouse more affordable and boost domestic spending.
Smirnoff maker Diageo edged up 7.5p to £26.23 while Reckitt and Unilever jumped 50p to £64.70 and 28.5p to £42.61, respectively, as the three softened the FTSE 100’s 7.6 point fall to 7,409.64.
Burberry was still not in vogue for investors despite broker Berenberg backing chief executive Marco Gobbetti’s new upmarket strategy.
The trenchcoat maker has seen its shares shed 12pc since the announcement but analyst Zuzanna Pusz insisted that the move to luxury was “necessary but painful”. Ms Pusz added that she did not share the scepticism about how long it would take for the strategy shift to feed through, but investors could not be convinced and the fashion house slipped a further 8p to £17.40.
Ocean shipping firm James Fisher and Sons suffered its sharpest fall in a year in intraday trade after admitting that the pick-up in its offshore oil unit had stuttered.
The FTSE 250 firm left its full-year guidance in check and gradually pared its 5pc slump to nudge down just 22p at £16 as investors found the silver lining in the figures.
On London’s junior Aim market, management consultancy firm WYG plunged 22p, or 33pc, to 45p after issuing a fresh profit warning, its second in three months. The firm pinned the “substantially lower” guidance on the loss or delay of new contracts that it had previously expected to win.