Monstermob, the mobile phone games and ringtones provider that has issued three profit warnings this year, has received an approach for the company.
On Tuesday the company confirmed that it had received an approach but said that talks were at a preliminary stage “the proposals being considered are subject to a number of material pre conditions and there is no certainty that any offer will be made for the company,” it said in a statement.
Shares in the group climbed 14½p to 56p on Monday as rumours swept the market of a possible move for the group. Its woes have resulted in the share price losing 90 per cent of its value in the past six months.
Monstermob has endured a turbulent half year, during which time the Lancaster-based company has struggled to overcome a slowing UK market. Ringtones providers faced a consumer backlash and regulatory disapproval over aggressive sales tactics for ringtones such as the Crazy Frog.
Monstermob’s closing share price valued the group at £34m. Stock market rumours suggested the bid was led by Martin Higginson, former chief executive, who was replaced in June by Niccolo de Masi, the former JPMorgan banker who joined Monstermob as managing director in 2005.
However, the approach is believed to come from another party. A person familiar with the situation said it was “unclear whether it was serious or opportunistic”.
As ringtone sales dwindled, Monstermob effectively abandoned its domestic market and this year has rapidly expanded overseas, particularly in China, with a string of acquisitions.
In July it was forced to renegotiate payments to vendors of two of its Chinese businesses, with investors worried about a possible dilution of shareholdings.
The shares then lost half their value after it said changes to Chinese subscription rules would lead to a significant cut in second-half revenues.
China Mobile’s plans would result in fewer content providers with greater market shares but Mr de Masi was confident it was well placed for the development of such a market.