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STOCKS NEWS EUROPE-Ladbrokes rises in chunky volume on bid talk

Reuters - UK Focus

British gambling group Ladbrokes (LSE: LAD.L - news) rises 5 percent to 188.80 to top the FTSE 250 (FTSE: ^FTMC - news) gainers list in heavy volume, which traders and analysts attribute to bid speculation surrounding the company.

Trading volumes in Ladbrokes stand at 1.1 times the usual 90-day average amount - above those for the FTSE 250 where volumes stand at just 0.1 percent of the 90-day average amount.

Labrokes shares extend the previous session's gains of 6.4 percent, which came after a block of shares were snapped up at just below the 3 percent disclosure limit, which prompted market speculation of stake building with venture partner Playtech and private equity group CVC (Taiwan OTC: 4744.TWO - news) mentioned among potential bidders.

Playtech and Ladbrokes had no comment on the speculation. Officials at CVC could not be immediately reached for comment.

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On CVC, Numis writes in a note that CVC has extensive experience in the gambling sector.

"Among other interests it was an owner of William Hill (Other OTC: WIMHY - news) at the time of the 2002 IPO, recently bought Skrill (Moneybookers) from Investcorp and was behind the recent non-bid for Betfair."

On Playtech, the broker comments: "It might be commercially difficult for Playtech to become an operator in a market where it provides key services to what would then be its competitors."

Numis also notes that Ladbrokes has large 'short' interest positions betting on the stock falling, which may make the share price particularly likely to react sharply to large trades like the one on Wednesday and after a period of underperformance.

Thirty percent of Ladrokes' shares that are available for loan are being utilised by hedge funds, up from 6.5 percent in late April. It is the 12th most shorted stock on the FTSE 250 and Ladbrokes has come under pressure on earnings after a profit warning in late September.

Reuters messaging rm://sudip.kargupta.thomsonreuters.com@reuters.net

Reuters messaging rm://david.brett.thomsonreuters.com@reuters.net