Week ahead: Foxybingo owner to publish results as takeover saga rolls on

Chiquito is owned by The Restaurant Group.

Chiquito is owned by The Restaurant Group. - Credit: Lucy Taylor

The latest developments in the takeover moves for bwin.party will be in focus this week while challenger bank Aldermore and Frankie & Benny’s owner The Restaurant Group also update the City on progress.

FoxyBingo owner Bwin.party publishes half-year results on Friday on the same day as takeover suitor 888 Holdings - in the wake of a series of attempts by rival GVC to gatecrash the tie-up between the pair with a higher offer.

The intervention by GVC could throw the spotlight back on to 888 to try to improve its proposal.

Bwin last month agreed to an £898.3million cash-and-shares takeover by Gibraltar-based 888, which hailed the transaction as a “transformational opportunity” to boost the amount of games it offers and make savings.

A higher offer from Sportingbet owner GVC worth £906m had been rejected, with analysts suggesting this was because Bwin’s management had better confidence in its share growth potential under the 888 tie-up.

But Isle of Man-based GVC came back with another try ten days after the deal was agreed, upping its valuation to £1billion or 122.5p per share.

It also said its proposal would lead to savings of more than 135m euros (£95m) a year by the end of 2017.

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This compared to 888, which said its takeover would see savings of not less than 70m US dollars (£45m) a year by the end of 2018.

GVC went higher again earlier this month with a proposal worth 125.5p per share, or £1.03bn.

Bwin said it was working closely with GVC on “progressing certain aspects” of the offer but that this did not change its acceptance of the 888 proposal.

Peel Hunt analyst Nick Batram said the GVC proposal deserved serious consideration but that it would have to convince bwin shareholders that its targeted cost savings were “tangible and deliverable”.

He added: “At the very least we would expect 888 to come through with a material increase to its synergy target and possibly a top-up to narrow the gap.”

Brokers at Morgan Stanley expect half-year revenues at 888 to fall 5% to 214m US dollars (£137m), with underlying growth dragged down by exchange rate movements.

They have also pencilled in a 31% fall in underlying earnings to 34m US dollars (£22m), impacted by changes to the way the Government taxes online betting.

Challenger bank Aldermore is forecast to more than double profits when it posts its half-year results on Thursday, amid expected growth in customer numbers and the amount it lends.

Brokers at Numis expect the Cheshire-based group, which has 170,000 customers and launched in 2009, to see its six-month pre-tax profits jump by 120% to £41m helped by loan book growth of 27%.

The analyst also expects revenues to leap 44% in the period, and impairments from bad loans to fall by 2% at the bank, which targets lending to small businesses and the mortgage market.

Aldermore is one of a group of challenger banks set up in the wake of the financial crisis, aimed at breaking the dominance of the major high street lenders such as HSBC, Barclays, Lloyds and Royal Bank of Scotland.

Brokers at RBC Capital Markets expect the bank, run by former Barclays executive Phillip Monks, to post a “positive statement outlook”, despite the 8% surcharge that Chancellor George Osborne said he would be applying to bank profits above £25m in last month’s summer Budget.

Rival challenger bank TSB, which is being bought by Spanish rival Banco de Sabadell, has said the surcharge level on profits should be set ten times higher at £250m. It plans to lobby the Government in a bid to raise the limit.

Aldermore said in a first quarter trading update in May it was on track hit £1.4bn of new lending this year.

It added that total customer deposits lifted 4% to £4.7bn compared to last year, while small business deposits jumped 10% to £1.1bn.

Numis said: “The operating environment remains extremely benign and we expect further substantial growth through the second half of the year.”

The lender floated in March valuing itself at around £650m, and raising £75m to support the growth of the business.

The firm had originally planned its initial public offering last October, but scrapped it at that time blaming deteriorating global equity markets.

The owner of Frankie & Benny’s is expected to post solid growth when it reports its results for the first six months of the year on Friday, with the City expecting the release of James Bond movie Spectre and the latest Star Wars blockbuster will see it also finish the year strongly.

Brokers at Numis expect The Restaurant Group, which runs more than 470 outlets and over 50 concessions including Chiquito and Garfunkel’s, to post first-half pre-tax profit up 9% to £36.7m, due to rising consumer incomes and the location of many of its eateries in cinema complexes and airports.

The analysts said they expect the business, which employs 15,000 people and serves 43m meals a year, to turn in like-for-like sales growth over the period of 2.5%, outperforming growth in similar businesses of 2.3%

The FTSE 250 group’s London restaurants, which tend to be on high streets, are expected to have grown by only 0.5%, according to Numis. But the broker added that only around 3% of the firm’s estate is in the capital.

The company said in May that it expects to open up to 50 restaurants this year, with around two thirds of openings taking place in the second half.

Numis expects performance to be stronger in the second half, with like-for-like sales forecast at 3.5%, due a number of strong film releases such as Spectre in November and Star Wars: Episode VII - The Force Awakens a month later.

The analysts also said the group could benefit from the weakness of the euro and disruption at the Channel Tunnel encouraging air travel - helping business at its airport sites.

A consensus of City analysts expects The Restaurant Group to post a full-year pre-tax profit up 12% to £87.6m.