FTSE 250 movers: Playtech on winning streak; Close Bros slides

(Sharecast News) - Shares in Playtech rose sharply on Monday after the UK gambling technology maker said it had struck a revised deal with Mexican gambling operator Caliente Interactive over their Caliplay joint venture and said annual adjusted earnings would be slightly ahead of expectations, driven by its business-to-business (B2B) division.

The revised deal ends a dispute between the duo over unpaid fees. Caliplay has also resumed paying Playtech its software and services fee with more than €150m (80% of the total) already being paid.

Playtech also said it has entered into an agreement with Caliplay and will take a 30.8% equity stake in Cali Interactive, Caliplay's new holdoing company.

Under the terms of the deal, Playtech will have the right to appoint a director to Caliente's board and also entered a revised eight-year B2B software licence and services agreement.

Playtech on Monday said the B2B unit's Americas region posted strong revenue growth in the six months to June 30, while overall cost control also contributed. Share in the firm were up 13% in London.

In its business-to-consumer business, Playtech's Italian Snaitech unit continued to see underlying growth in wagers against a tough comparative while being negatively impacted by customer-friendly sporting results in Italy, particularly at the start of the year.

Playtech last month confirmed it was in talks with Flutter around the potential sale of Snaitech and on Monday said "discussions continue, although there can be no certainty that any transaction will ultimately be agreed, or as to its terms".

Shares in UK automotive parts supplier TI Fluid Systems soared by 15% on Monday as the company said it had rebuffed two approaches from Canada's ABC Technologies over the past month.

ABC - owned by private equity giant Apollo - made an initial proposal of 165p a share on August 22 and a revised 176p-a-share offer on September 4 - a 20.7% premium to TI Fluid's closing price on September 13. In response TI Fluid - which makes products such as fuel systems - said the bid "significantly undervalued" the company and its prospects.

Under UK takeover laws ABC has until 1700 BST on October 12 to make a firm bid or walk away. It insists it was still interested in a deal and was "considering its position".

TI Fluid in August posted interim profits that came in ahead of expectations on and said it was confident that adjusted underlying earnings margins would continue to expand throughout full-year 2024.

Adjusted pre-tax earnings were up 2.7% year-on-year at €135.5m, beating market expectations for a print of €131.0m, while operating profit margins expanded to 7.9% from 7.5%, above the 7.4% targeted by the group.

"Another day, another bid approach for a down on its luck UK company. This time TI Fluid Systems is in the crosshairs with Canada's ABC Technologies putting out the loaded statement it is 'considering its position' after having two initial bids rebuffed," said AJ Bell investment director Russ Mould.

"TI Fluid Systems has struggled to make much headway since its 2017 IPO, not helped more recently by the uncertainty in the automotive market where regulation is pushing for a transition to electric vehicles but consumer demand isn't keeping up."

"This makes it difficult for TI Fluid's clients to make investment decisions, even if TI Fluid has worked hard to make itself 'propulsion agnostic' - i.e., it doesn't matter if the demand comes from EVs or traditional petrol vehicles."

"Against this backdrop, shareholders may conclude they are best taking the money on the table from ABC, but this would mean a further thinning of the ranks of a UK market which has been picked apart in recent years by overseas predators."

Analysts at broker Jeffries said the offer was not "sufficiently attractive".

"This is certainly not a knockout offer, in our view, despite ongoing industry uncertainty and volatility and noted the upgraded offer price was below its own 12 month target price of 185p.

"On a longer-term view we agree it undervalues the company (particularly when considering likely synergies). Despite the highly challenging backdrop for suppliers, we are more positive on TIFS than we have been while covering the stock - the group has seen strong operational and strategic momentum as of late (and should benefit further from the wider shift to hybrids), and there is a realistic pathway towards 10%+ EBITA margins in the medium term (top-end of the sector), which would drive a meaningful rerating."

Close Brothers said on Monday that chief executive Adrian Sainsbury has taken a temporary medical leave of absence from the business.

The merchant bank said it has put in place "robust" temporary cover arrangements to ensure continuity in the delivery of its strategy.

Group finance director Mike Morgan will assume Sainsbury's principal responsibilities, supported by chairman Mike Biggs and members of the senior management team.

The scheduled full-year results announcement will go ahead as planned on Thursday 19 September, Close Brothers said, hosted by Mike Morgan.

"A further update will be provided in due course," it added.

Market Movers

FTSE 250 (MCX) 20,915.04 0.09%

FTSE 250 - Risers

Playtech (PTEC) 743.00p 13.61% TI Fluid Systems (TIFS) 164.00p 12.48% Alpha Group International (ALPH) 2,245.00p 3.94% Ashmore Group (ASHM) 191.80p 3.23% NCC Group (NCC) 173.00p 3.22% JTC (JTC) 1,120.00p 2.56% RS Group (RS1) 795.50p 2.18% Ocado Group (OCDO) 337.50p 2.03% Coats Group (COA) 100.20p 1.83% Hochschild Mining (HOC) 185.40p 1.64%

FTSE 250 - Fallers

Close Brothers Group (CBG) 520.50p -3.34% Spire Healthcare Group (SPI) 236.00p -3.08% Oxford Instruments (OXIG) 2,145.00p -2.72% Endeavour Mining (EDV) 1,797.50p -2.10% Trustpilot Group (TRST) 224.50p -1.75% Senior (SNR) 159.40p -1.73% Vietnam Enterprise Investments (DI) (VEIL) 566.00p -1.57% Johnson Matthey (JMAT) 1,578.00p -1.56% Morgan Advanced Materials (MGAM) 285.50p -1.55% Polar Capital Technology Trust (PCT) 291.50p -1.52%