Investors placed a flurry of bets on Entain, the owner of the Ladbrokes and Coral brands, as speculation mounted yesterday that MGM Resorts is eyeing up a bid.
Entain rejected a $11 billion takeover offer from the Las Vegas casino operator this year but some believe that MGM is lining up another offer after selling its stake in MGM Growth Properties for $4.4 billion.
“Investors have been debating the likelihood of MGM returning with an improved bid for Entain since its first unsuccessful bid,” Michael Mitchell, an analyst at Davy, said. “The market believes [MGM’s] strengthened balance sheet, following yesterday’s news, has increased the possibility of the same.”
MGM said the sale had given it “$11.6 billion of domestic operations liquidity available to enable execution of its goals of becoming the premier gaming entertainment company”.
Entain’s shares jumped by 6.1 per cent, or 110p, to £19.12½ after the announcement, making it the biggest climber on the FTSE 100. The British gambling sector was buoyed by the speculation,with Flutter and 888 Holdings rising by 2.3 per cent, or 275p, to £122.65 and 3.6 per cent, or 13½p, to 382¼p, respectively.
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Mining companies also put in a decent showing on the back of strong metal base prices and an increase in their weighting by Credit Suisse. Fears of a slowdown in China were weighing on the sector as policymakers started to tighten policy but analysts said that “the bulk of China tightening and slowdown is now behind us.” Anglo American and BHP Group rose by 1.5 per cent and 0.2 per cent respectively.
The sectors helped to lift London’s senior index by 18.14 points, or 0.26 per cent , to 7,123.86. The FTSE 250 also edged higher by 0.25 per cent, or 58.08 points to 23,347.73.
Strong corporate earnings have supported markets in recent days but sentiment is still being held back by the spread of the delta variant of the coronavirus. A closely watched business survey published yesterday showed that Britain’s recovery slowed in July as rising infection numbers meant millions of workers were forced to isolate after being alerted by the NHS app.
However, investors responded positively to another round of strong corporate earnings. Shares in Legal and General were up 2.92 per cent, or 7.7 p, to 271.5p after it increased its dividend and announced a jump in profit before tax. Taylor Wimpey climbed by 1.91 per cent, or 3.15p, to 168p after the housebuilder said its annual operating profit would come in above the top end of market consensus. It is benefiting from a booming property market, which has helped housebuilder stocks to rise by 2.3 per cent this year.
The mid-cap index was boosted by Oxford Instruments, the scientific instruments maker, which is already a favourite with analysts. The company announced a 12.9 per cent rise in profits in its preliminary results two weeks ago and now Zacks Investment Research has weighed in by upgrading the stock from hold to buy. Shares in the company closed up 3.4 per cent, or 85p at £25.60.
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Ibstock, the bricks and concrete manufacturer, also climbed on the back of news that it is making a strong recovery from the pandemic. The company reported first half pre-tax profits of 39 million and reinstated a dividend, causing its shares to rise by 1.0 per cent, or 2¼p, to 223¼p.
Elsewhere, the e-commerce company The Hut Group rose by 1.2 per cent, or 7p, to 586½p after it announced plans to buy the online beauty retailer Cult Beauty for £275 million.
Not what the doctor ordered
Dr Martens’ stock stumbled yesterday after a former chief executive sold his stake in the business.
David Suddens, who led the company for 12 years until 2014, sold 17.7 million shares at 408p each, a 4.7 per cent discount on Tuesday’s close of 427¾p. That comprised a 1.8 per cent stake worth £72.2 million.
Shares in the bootmaker, which made its stock market debut this year, fell by 18½p, or 4.4 per cent, to 409¼p. The stock has lost a fifth of its value since hitting 521½p on February 9 amid growing unease about its prospects as the country emerges from lockdown.
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After stomping ahead for much of the lockdown, Dr Martens’ internet sales growth slowed sharply in the first quarter. In a trading update last month, the company said that ecommerce growth had slowed to 11 per cent and analysts fear that the company will struggle now that more of its competitors are up and running.
Dr Martens traces its roots to postwar Munich, when Klaus Märtens developed the air-cushioned rubber sole to support his foot after a skiing accident. The boot was developed by the Griggs family in Northamptonshire, who bought the rights.
Wall Street
A slump in General Motors shares to a five-month low weighed heavily on the S&P 500, pulling it back from record highs, and on the wider market, with the Dow Jones industrial average falling by 323.73 points, or 0.9 per cent, to 34,792.67.
