While the rest of the market was fixated on the debut of Granada Media, the seemingly unstoppable slide of QXL continued.
Shares in the internet auction group, which started the year at around the 450p level, closed down 4.5p at 69p yesterday as investors took fright at concerns surrounding its German bid target, Ricardo .
Last week Ricardo was identified by widely read German newsletter Platow Brief as one of a number of Neuer Markt stocks facing financial ruin if it failed to secure fresh funding. While analysts say the concerns are unfounded and Ricardo will not run out of cash, it shares continue to fall (declining 18% yesterday) and hurt QXL.
According to a note published by Deutsche Bank, the fall in Ricardo has presented an interesting arbitrage op portunity. The steep decline in Ricardo's share price, it claims, has not been matched by the decline in the QXL share price. As a result, the current value of QXL's all-stock offer for Ricardo is around 35% higher than the German group's share price.
With the deal likely to go ahead (Ricardo's management team is sitting on 50% of the company's equity) an opportunity to "buy" Ricardo and "sell" QXL until the anomaly is corrected exists, Deutsche reckons.
With more than 5m QXL shares changing hands yesterday, it appears some shrewd arbitrageurs have picked up on the idea.
But it was not all bad news for new-economy stocks. Durlacher , the internet investment boutique, advanced 2.5p to 62p as investors greeted with relief news that it has managed to raise more than £10m in cash.
Durlacher raised the funds through a placing of 15.85m new shares at 65p with a small number of institutional investors.
The FTSE 100, meanwhile, ended a lacklustre session marginally higher (up 9.6 points at 6,475.8) as a good performance from Wall Street offset the impact of Granada Media , which sucked most of the buying interest out of the market. Shares in Granada Media, trading on a "when issued" basis (that is, before investors have received share certificates), closed at modest 35p premium to the 515p offer price after 125m shares had changed hands.
HSBC had another good day, rising 38p to 805p as Com merzbank initiated coverage with a "buy" recommendation and a 913p target price. Commerzbank reckons HSBC offers an attractive mix of high growth via its presence in Asia, and earnings stability from an increasing presence in Europe and the US.
BP Amoco also performed well, advancing 10p to 625p after unveiling some of its masin strategic pointers to City analysts.
Diageo reversed early gains, losing 0.5p to 604, after a disappointing trading update, but home shopping group GUS , managed to rise 6p to 458p as broker Schroder Salomon Smith Barnet lifted its target price to 540p
The FTSE 250 saw a return to form for old-economy stocks. British Energy led the charge, gaining 24p to 220p on unusually heavy turnover after its Bruce Power unit signed a lease deal with Ontario Power Generation for two nuclear power stations.
Shipbuilder Vosper Thornycroft stood out, rising 123p to £13.90 following news that it will build one of the Royal Navy's three new warships. The deal represents five years' work for Vosper's shipbuilding workforce of around 1,500 people.
Regal Hotel Group surged 3p to 29.5p after agreeing a 30.5p per share from Regent Corp.
Software firm Staffware climbed 100p to £22.75 p after winning a contract with Abbey National. The deal, which will see Abbey use its Enterprise Workflow product, is valued at £1.64m.
Sportsworld Media continued its good run, 25p stronger at 600p.
Icollector takes beating
As concerns have mounted over the ability of business-to-consumer internet stocks to secure fresh capital, the share price of Ofex-listed Icollector, an online auction site for the arts and antiques industry, has taken a beating.
After reaching £16.80 at the height of internet gold rush in March, the shares closed yesterday at 185p. But supporters of the stock claim the foundations are in place for some interesting developments.
Yesterday the company raised £6.5m in a convertible bond issue from shareholders, including the internet investment vehicle of luxury goods magnet Bernard Arnault, Europ@web. According to James Corsellis, Icollector's chief executive, the fund raising gives it enough cash for the rest of the year.
With Europ@web promising to play an active role in the development of Icollector - yesterday it placed another director on the board - the shares are an interesting, if risky, punt.
