Markets & Finance

William Hill Falls on Acquisition


From Standard & Poor's European MarketScope

Britain

Bookmaker William Hill was down £0.15 to £5.11, after it announced that it has agreed to purchase Stanley Leisure's retail bookmaking operations for £504 million. The company said that this will involve the addition of 624 licensed betting offices, and will deliver £13 million in synergies in the financial year ending in December of 2006. The company added that, in the light of this acquisition, it will not be proceeding with the capital return announced on March 2 2005. The brokerage Seymour Pierce said that the price is at the bottom end of the range but nevertheless is still too high. The broker does not believe that owning more shops adds value and downgraded the company to sell from hold.

Clothing retailer Next was up £0.24 to £14.99. The stock is well bid on fears of a short squeeze after the British press over the weekend highlighted the big volume of short positions on the company. These worries are exacerbated by news that peer H&M reported April sales up 15%.

Biotech outfit Cambridge Antibody Technology was down £0.12 to £5.68, after it dropped its previously stated aim of achieving profitability by 2008. The company thinks that this is no longer in shareholders' interest, as it would limit its capacity for investment. The company also said that it is on target to commence its initial five discovery programmes with AstraZeneca. It said that net cash and liquid resources stand at £178.2 million as of March 31.

Mining group Rio Tinto was up £0.24 to £15.95, after Citigroup raised its commodity prices and earnings forecasts across the British mining sector. The bank said that the global economy and commodity markets are maturing and prices are approaching a peak for this cycle. Nevertheless, the bank thinks that robust demand growth and supply constraints will support prices at high levels by historic standards. For the company, the bank has upgraded its 2005 earnings after tax estimate by 2% to $4.5 billion from $4.4 billion.

France

Broadband internet equipment provider Alcatel was up €0.23 to €8.59, as investors switch to the company from Ericsson on hopes that Alcatel will announce new contracts at its analyst meeting on May 25, traders said.

Cigarette maker Altadis was down €0.59 to €33.16, after the brokerage Cheuvreux highlighted that the company's earnings before interest, taxes, depreciation and amortisation was up 6%, or 2.5% below its estimates, basically due to Spanish cigarette operations. The broker added that in the blond segment in Spain, sales were down 11% due to a lower share and 5% market constriction. In France the company's sales were down 12% in this segment, due to reduction of inventories. The broker said that the performance in the rest of the group was basically in line. The company is in Cheuvreux's selected list with €40.80 target. The bank Caja Madrid says that, in general terms, the results were slightly better than its estimates and below the consensus, but still not a substantially different. In terms of business lines, the bank highlighted that the cigarettes group was the worst performer compared to estimates, while cigars were slightly better and logistics were in line. It rated the company reduce. Elsewhere, the company's co-chairman Pablo Isla will become ceo of Inditex, the owner of Zara. Altadis has appointed Antonio Vazquez, formerly head of the company's cigars division, as new co- chairman.

Media group Vivendi Universal was up €0.27 to €24.36, after the Financial Times reported that the company's Universal Music unit is preparing a sweeping overhaul of its international operations. The newspaper says the group is to review its country operations in Europe and Asi and consider a new board structure for its non-U.S. businesses. The paper said that the move follows promotion of Lucian Grainge, head of Universal in the UK, to become chairman and CEO of the international business.

Drug development company Cerep was down €0.24 to €9.30, after the bank ING cut its target to €11.10 from €11.90 following disappointing first quarter results. The broker said that poor sales growth stems from Cerep's discounting policy and reduced revenues from Sanofi after the Aventis merger. It pointed out the company plans to keep research and development, but warns that the business model could struggle to generate sufficient profitability to warrant expansion. The broker maintained a hold rating.

Germany

Drugmaker Schering was down €1.92 to €51.68, after its colon cancer drug PTK/ZK failed to significantly help patients with advanced colon cancer, researchers said. But scientists are reportedly holding out for finding the right group of patients to treat with PTK/ZK, which is being jointly developed with Novartis

Real-estate group IVG was up €0.33 to €14.09 after the Spanish website El Confidencial reported that the company has presented an offer to acquire a 72.34% stake in Spanish property group Inmocaral.

Television broadcaster Prosieben was down €0.57 to €12.93, after UBS trimmed its target for the company to €15 from €15.5 and kept its neutral rating. Lehman Brothers also lowered its target to €16 from €17, as it reiterated its equal weight rating. The company also trades ex-dividend Monday.

Drug and chemical maker Bayer was down €0.32 to €25.94, after results from a

late-stage clinical trial showed that the company's sorafenib kidney cancer drug, which it is developing with US partner Onyx, helps patients live longer.

Drugmaker Merck was down €0.64 to €62.11 after trials showed that the company's newly-launched cancer drug Erbitux slows the spread of rectal and colon cancer and enables more patients to have surgery. The results were presented to a medical conference in Orlando, Florida.


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