The historic engineering group Invensys last night controversially refused to issue a statement to the Stock Exchange despite a 27 per cent share price rise following reports it could be taken over by Emerson Electric of the US.
Invensys was created from the merger of the old Dunlop owner, British Tyre and Rubber, and engineering group Siebe. Shares in the £2bn company shot up after reports said Emerson was looking at buying all or some of the company. The rise added nearly £440m to Invensys' stock market value.
The Bloomberg news agency, citing multiple sources, said Emerson had expressed an interest in buying its Foxboro unit, which makes meters and control systems. While it does not want the rail division, it is so keen on Foxboro that it would buy the whole company in order to get it, they said.
Takeover talk has swirled around Invensys for weeks, although none has created such a furore in the share price as yesterday's.
But despite the usual practice of releasing a statement noting a share price movement of such magnitude – the shares rose 54p to 257p – the company stayed mum, with a spokesman merely saying: "We never comment on speculation."
Some analysts remained sceptical about whether a deal could be achieved because of the disastrous shape of Invensys' UK pension fund. It is currently running a deficit of £426m.
"A deal is hard to do because a large part of any money they get for the business is going to go straight to the pension fund and not the shareholders," said one analyst.
However, others pointed out that Invensys is chaired by City veteran Nigel Rudd, who has a reputation for selling companies including Boots and Pilkington. He also merged Pendragon, the car dealership firm. Coincidentally, Invensys' predecessor BTR launched a bitter hostile takeover battle for Pilkington in 1985 but was eventually forced to pull its campaign.
"If anyone can get a deal done, it's that man Mr Rudd," said one engineering sector analyst.
Invensys advisers have been talking to several other potential buyers - all of them from abroad. Siemens, GE, Eaton and ABB have all been named in speculation.