Traders Betting on Bookies: Shares Climb
(Reuters) - Bid talk and relief about 'less draconian' Government measures lift the bookmakers
Traders were betting on the bookmakers amid a revival of bid gossip and relief that a clampdown on the gambling industry was likely to be less severe than feared.
Ladbrokes climbed 6.4, or 4.6pc, to 145.1p - the single best performing share in the FTSE 250 as traders heared renewed speculation of a takeover. The theory was the same as the one that had sent shares in the bookie higher a few weeks earlier: that Paddy Power, possibly in combination with a private equity group, was poised to make an offer for Ladbrokes. But the rather stale nature of the rumour did not deter London’s more speculative traders, and Ladbrokes ended at its highest for more than five weeks.
Meanwhile, news that the Government will this week give local councils the power to veto the opening of new betting shops also lent support to Ladbrokes, and sent William Hill up 8.1, or 2.4pc, to 348.1p. The measure is likely to work in their favour: a veto would make it harder for competitors to expand and take market share from Hill and Ladbrokes, which are the incumbents and would see the value of their pre-existing estate rise.
Suggestions that the Goverment would not cut the £100 maximum stake wagered on fixed odds betting terminals (FOBT), known as “crack cocaine” gambling machines, but would instead implement a rule requiring that gamblers receive permission from staff before spending over £50 on FOBT machines, were also received favourably by investors.
“The shares were pricing in more draconian measures”, said Greg Johnson, analyst at Shore Capital.
Still, while the bookies were a talking-point, it was AstraZeneca that was the focus of the day, with its shares surging 586½p, or 14.4pc, to £46.66½ after Pfizer stepped up is pursuit of the drugmaker. The US giant confirmed it had made a £46.61 a share approach in January, and the experts at Deutsche Bank reckoned Pfizer would now need to pitch its offer at £50-55 per share for the British company to start negotiations. Continuing bid speculation lifted fellow drugmaker Shire 76p to £32.86.
