RUMOURS that PartyGaming is preparing to trump a £790 million takeover offer for Empire Online continued to excite shares in the AIM-listed gambling group yesterday.

In a move that could lead to the biggest acquisition in online gaming history, PartyGaming is tipped to spark a takeover battle for Empire by countering a mooted 270p per share offer from Sportingbet.

Some analysts speculated that a bidding war could result in a takeout price of up to 360p per share, valuing Empire at just short of £1 billion. The rumours sent Empire shares, which made their stockmarket debut at 175p two months ago, surging by 19p to 283p.

Empire operates marketing sites that attract customers for clients including PartyGaming and 888.com. Analysts said that it would be a “surprise” if PartyGaming did not counterbid as it would not “want to lose one of its best sources of business”.

PartyGaming, the stock market newcomer that is expected to be propelled into the FTSE 100 index in tomorrow’s quarterly reshuffle, remained poker-faced yesterday, but it is likely to face a grilling from shareholders and analysts when it presents maiden first-half results today.

Investec Securities said that a takeover of Empire would be “both financially and strategically compelling” for Sportingbet, whose shares jumped 3p to 371p as the AIM-listed firm confirmed its interest in Empire.

The prospect of imminent bid activity also boosted Somerfield’s shares. The stock gained 4¾p at 204¼p after reports that the Livingstone brothers, who own the London & Regional property group, have lined up a deal to sell hundreds of Somerfield stores to mutual retailer United Co-operatives to help them to win the bid battle for the supermarket group.

Other reports suggested that Robert Tchenguiz, the property tycoon, is set to announce a formal bid for the supermarket group this week.

DS SMITH was rocked by a profits warning as the packaging and office products company told investors that its full-year results would fail to meet estimates amid rising energy and fuel costs. The shares fell 11p to 152¾p.

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