Whitbread whets dealer appetites
THIRSTy buyers woke up, smelt the coffee and piled into Whitbread, 122p better at 3114p. They responded to revived speculation that the leisure giant might soon decide to hive off its Costa Coffee business, which recorded a total franchise sales increase of 18pc in the second quarter.
Investors’ appetites were also whetted by a bullish Barclays note which advised clients that the fall in the share price since the quarterly figures was overdone. The broker reiterated its overweight stance and target price of 3420p.
adding to the overall enthusiasm came news that almost 8m overseas visitors stayed in london during the first half of the year, up 8pc on 2012. Spending in the City was up 12pc at a record £4.9bn.
Many tourists would have stayed in Whitbread’s Premier Inn discount chain of hotels, which are advertised by comedian lenny Henry. Premier recently announced plans for a new hotel concept ‘hub by Premier Inn’.
It will apparently be a new generation of compact city centre hotels with ingenious, contemporary room design and excellent connectivity to be opened in the next three years with a view to the group having 40 (6,000 rooms) in the pipeline by 2018. The first is scheduled to open on St Martin’s lane in london in the summer of 2014.
Betting shop group Ladbrokes ensured the leisure sector remained the focus of attention. It shares galloped ahead on revived takeover speculation to touch 188p before closing a further 5.2p better at 185p. Speculation intensified after a mystery buyer, believed to be Playtech founder Teddy Sagi, bought 21.8m shares for £37.1m at 170p a pop. Dealers believe the near-3pc stake could be a precursor to a full-scale bid.
Private equity group CVC is also tipped as a possible bidder. Numis analyst Ivor Jones says CVC has extensive experience of gambling. It was an owner of William Hill at the time of the 2002 flotation and recently bought Skrill (formerly Moneybookers) from Investcorp. It was also behind the recent non-bid for Betfair, 5p dearer at 980p.
Jones added that trading at ladbrokes has been poor and that it is struggling with considerable strategic challenges in a very competitive market.
all bets appeared to be back on for world stock markets amid signs the ice is breaking between President Barack obama and the Republicans and an agreement on the uS budget is now just around the corner. The Footsie jumped 92.58 points to 6,430.49 and Wall Street soared 200 points in early trading. Motor components group GKN accelerated 15p to 358.2p after poaching adam Walker from Informa to replace Bill Seeger as finance director when he retires in February.
Informa eased 0.5p to 509.5p on news of Walker’s departure, which comes hard on the heels of chief executive Peter Rigby’s retirement. Broker Panmure Gordon is of the opinion that the simultaneous departures could lead to a total break-up of the company over the next 12 months. Its target price is 630p.
Discount airline easyJet climbed 37p to 1253p after it announced it has increased capacity for next summer’s flights by almost 300,000 seats. It has put on sale more than 11.5m seats to 100 destinations across Europe, Northern africa, Russia and Iceland.
In belated response to an Investec recommendation in the wake of its purchase of the geotechnical division of the Joburg-listed civil engineering and construction company Esorfranki, Keller Group soared 110p to 1050p.
Steve Morgan’s housebuilder Redrow rose 5.1p more to 240.9p after being selected as preferred bidder for 1,650 homes on the site of a former police training centre in Hendon, north london. Floral design and homeware retailer Laura
Ashley rose 2.25p to 26.25p. The group recently announced plans to tap into the recovery in the housing market by targeting a younger clientele for its homewares division after a disappointing performance from its fashion range.
Renewed nervous selling on growing concern about its future dragged Finnish nickel miner Talvivaara down 1.7p or 20pc to a record low of 6.86p. The company warned investors that it was assessing all available options for additional funding after its liquidity position weakened more than expected. Founder and chief executive Pekka Pera’s stake was once worth £748m in late 2010 but is now valued at less than £1m.
Shares of explorer Leni Oil & Gas improved 0.08p or 10pc to 0.85p after the company said it had reached a milestone in oil production from interests in the Caribbean and Europe. It has achieved net oil production of more than 500 barrels a day from combined operations in Trinidad and Spain.
Sol Gold sparkled at 8.5p, up 2p or 31pc, following a positive assay result from its Cascabel Project in Ecuador.