Market Report: Analysts say Betfair should gamble on tie-up

The possibility of Betfair entering into a merger with its small-cap peer Sportingbet was being mulled over yesterday, as City scribblers argued a tie-up between the two gambling groups would result in a sure-fire winner for investors.

Numis Securities' Ivor Jones was the man behind the fantasy theory, with the analyst – who suggested "Fairly Sporting" as a name for the proposed group – claiming "a merger would create a better business than either company on its own".

The move, said Mr Jones, would give Betfair "the first-class fixed-odds bookmaking product which it needs to round out its product depth and avoid a lengthy, expensive and risky process of building it internally".

He added that Sportingbet, meanwhile, would get to use Betfair's betting exchange "as a risk management tool which would allow it to confront competitive pressure on price by always being able to offer market-leading odds at low risk to itself".

Despite the analyst estimating "Fairly Sporting" could end up being worth as much as 1,382p a share, Betfair – which had its "buy" rating reiterated – still closed 30p weaker at 820p on the mid-tier index while Sportingbet was pegged back 1.75p to 40.5p.

They were by no means the only ones in the red, however, as the news that finance ministers had decided to delay their decision on the €12bn loan to Greece prompted fallers across the board. The financial stocks certainly suffered, with Royal Bank of Scotland and Lloyds Banking Group driven down 1.78p to 38.51p and 1.24p to 47.16p respectively, prompting the FTSE 100 to retreat 21.55 points to 5,693.39.

Having fallen nearly 110 points over the last four sessions, the latest move left the blue-chip index at its lowest level since March, when the Japanese tsunami and earthquake provoked a sharp drop in global markets. Not everyone was pessimistic, however, as Nomura's analysts suggested that "if we can get through the next few days without a slew of downgrades, the market will be ripe for a rally".

With little appetite for risk, it was hardly a vintage session for the miners, but Eurasian Natural Resources (ENRC) still finished high up the leaderboard. The Kazakhstan-based group shifted 10.5p to 726.5p after Goldman Sachs started its coverage with a "buy" recommendation, saying it was in a strong position "to benefit from the pick-up in global growth that our economists expect and strengthening commodities momentum".

ENRC recently received a boost from speculation it could be a target for Glencore, although the commodity trader announced it was not considering an approach. Nonetheless, said the broker, a number of factors – including its "high growth potential" – meant that ENRC "could be viewed as a potential merger and acquisition candidate". Inmarsat took the gold medal position, rising 26p to 590.5p after reports that the mobile satellite group's US partner LightSquared has signed a contract with Sprint over its ambitious plans to create a wireless network across the States.

The network sharing agreement, said Investec's Morten Singleton, "would seriously improve the viability of the nascent wholesale 4G operator", and the broker estimated the news could be worth around 150p a share for Inmarsat.

Mr Singleton also turned his eye towards Vodafone, which ticked up 2.65p to 162.3p, following recent talk discussing whether the mobile phone giant could enter into a tie-up with Verizon. The analyst gave his blessing to the idea, saying "a merger is the most logical course of action", and reiterated the group's "buy" rating.

Investors choosing to pull the plug on Aggreko meant the temporary power supplier slipped 37p to 1,874p after releasing a trading statement in which it failed to increase its full-year forecast. The company said it expected its profits to grow only slightly from the previous 12 months, although Peel Hunt's Andrew Nussey suggested upgrades could come later in the year.

Meanwhile, Charter International, lost 25 per cent of its share price on the FTSE 250 following a profit warning. The equipment manufacturer slumped 179.5p to 538.5p after admitting it would fail to meet previous expectations thanks to rising costs at its welding tools business ESAB, which provides more than 60 per cent of its revenue.

Elsewhere, Supergroup was knocked back 37p to 863p, despite claiming the past few weeks had seen a positive change in trading, with the progress of its store opening programme disappointing.

Down on the Alternative Investment Market, Independent Resources soared more than 45 per cent higher following reports from Italy claiming its Rivara gas storage project is about to gain environmental approval.

The energy group rose 13.5p to 42.5p, despite saying it had not received formal confirmation "nor any details as regards the [Environmental Impact Assessment Commission's] deliberations or prescriptions".