Amvescap soars on talk of takeover interest

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Amvescap, the disgraced fund management group, could be about to put itself up for sale after hearing of bid interest from Germany and the US, according to a tale doing the rounds of the City yesterday.

Amvescap, the disgraced fund management group, could be about to put itself up for sale after hearing of bid interest from Germany and the US, according to a tale doing the rounds of the City yesterday.

Speculators pushed Amvescap shares up almost 4 per cent amid talk that Deutsche Bank, the acquisitive financial giant, is doing the sums ahead of a possible bid. There has already been gossip that a US fund manager such as Franklin will make an offer, now that Amvescap's fortunes have been brought low by the "market timing" scandal. The group had to pay a £250m fine this month for inappropriate trading in mutual fund shares, and halved its interim dividend. But worse, the group is likely to keep losing business, thanks to a combination of the bad publicity and its reduced creditworthiness because of the fine.

A bid now would also capitalise on the uncertainty at the very top of Amvescap. Charles Brady, the man who grew the company from a small US firm into a global giant, has promised to split the roles of chairman and chief executive, but no one has been promoted as yet. Amvescap shares rose 11.75p to 320.25p as a view gained ground that the company will surrender its independence before any hiring needs to be done.

Amvescap was the biggest mover in the FTSE 100, which put in another neutral performance, up just 8.1 at 4,556.5. At the other end of the table, Reckitt Benckiser dived 43p to 1,422p on rumours of an imminent profits warning. The maker of Vanish soap and Finish dishwasher tablets has previously not had a blemish on its record of product innovation and profit growth. But one big investment house - believed to be Goldman Sachs - yesterday told its clients to sell the stock in the short term.

There are rumours, too, that Banco Santander is but the first vessel in an armada of Spanish companies attempting to make conquests over here. Dealers received word from Madrid of rumours that Telefonica is plotting a £900m bid for mmO 2, the mobile phone group which owns O 2. Telefonica itself affected a yawn when contacted yesterday, saying it doesn't comment on rumours, especially not old ones. But shares in mmO 2, which had abortive talks with the Dutch group KPN in the spring, jumped 2.25p to close at 94.75p.

There was an extraordinarily high volume of trading in Lloyds TSB, where 184 million shares went through the system, and in Dixons, where 122 million changed hands. Lloyds TSB shares stayed calm, though, just 2p higher at 429.5p, and Dixons was up 2.25p at 165.25p, suggesting the volume related to derivatives trading. Investors fear that trading across the FTSE 100 could be volatile today before the expiry of a futures contract linked to the index.

There was heavy trading in Corus, the former British Steel, which reported a rare profit. One investor sold 100 million shares at 50p each, which were placed with institutions at 50.65p. The stake is 2.25 per cent of the company, whose shares were up 3p at 52.5p.

Big Food Group ticked another 2.5p higher to 92.25p after nudging and winking by brokers. Baugur, the Icelandic retailer which owns 22 per cent, is seen making a full bid, having cashed in £26m on House of Fraser this week. House of Fraser shares were 1.5p lower at 113p, as disappointed investors, who had hoped for a bid, limped for the exits.

Shares in Smith & Nephew, the maker of artificial hips and knees, fell again on fears it may not meet forecasts this year or sustain its impressive growth rates in the future. A new bear story is that S&N's hip resurfacing implant, scheduled for release in 2008, may be delayed. A similar product by a rival, Wright Medical of the US, has been delayed by regulators. S&N shares dipped 5.5p to 480p. Also in the medical equipment sector, Huntleigh Technology, the maker of hospital beds, was 5.5p better at 382.5p after positive comment on this week's results.

There was a flap on at SurfControl, the spam and porn filtering software group, whose shares lurched downwards in the morning. Detica, a smaller software group, launched a new web filtering product (its shares ended up 55p at 650p), and SurfControl investors feared a new competitor. In the end, SurfControl rushed out a statement saying that the Detica product has SurfControl technology built in and its shares, which had traded 15p lower, came back to end the day at 585.5p, off 4.5p.

Those who believe boardroom share sales augur ill for a company's fortunes had much to be alarmed at yesterday. Intertek's chief executive, Richard Nelson, sold a whopping £6m of stock. After selling £7.8m last year, he has agreed not to sell more for 12 months. But Intertek, a product testing company, is trading well and its shares were up 0.5p at a record 612p. There were also executive share sales of note at James Fisher & Sons, down 1p at 283.5p, XP Power, steady at 419p, and Bema Gold, 2.5p lower at 136p.

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