Market Report: Bid talk fuels turnaround for Retail Decisions

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The Independent Online

What a difference a week makes. Seven sessions ago investors were clamouring over one another to exit Retail Decisions. Yesterday, they were busy hoovering up stock in the belief that a takeover of the fuel card operator is just around the corner.

As the stock went into orbit, the company was forced to put out a statement confirming it was in "advanced" talks on a possible offer. By the end of the session it stood at 193.5p, up 36.25p. Retail Decisions was put into play in May. Since then reports have suggested that up to three US companies are interested in acquiring it.

The names in the frame are FleetCor, owned by private equity firms Bain Capital and Summit Partners; Wright Express, which runs Universal Fleet card across the Atlantic; and Comdata, part of the Ceridian Corporation. Retail Decisions is known to have rejected a 175p-a-share proposal from FleetCor so if a predator is to be successful it will have to offer a lot more.

Last week, the group's shares tumbled amid rumours that negotiations had collapsed. At one point the stock hit 134p as investors were gripped by fears that all bets could be off. However, it is likely that the panic was caused by one market player keen to add to his stake. By selling a small parcel of shares at excessively low prices, he caused a sharp drop in the stock, which spooked some big shareholders into thinking bid talks had hit the rocks. When they dumped their shares, he was there to scoop them up.

Meanwhile, the insurance sector was alight with takeover rumours. The talk was almost certainly sparked by comments from Giovanni Perissinotto, the co-chief executive of Generali, Italy's biggest insurer. Mr Perissinotto indicated his company would like to enter the UK market as along as the right acquisition opportunity presented itself.

In the past, Aviva has been seen as the most likely target for Generali. Its shares dropped 5.5p to 772p, but both Prudential, up 6.5p at 643.5p, and Royal & SunAlliance, 6.25p better to 150.75p, were in demand on hopes that they may be targeted soon by either the Italian group or a rival such as Axa, Allianz or one of America's insurance giants.

Man Group jumped 5.25p to 443.35p as gossips suggested that Goldman Sachs would be interested in buying the world's biggest hedge-fund manager. They talked of a 530p-a-share offer for Man from the US investment banking giant which would value it at more than £10bn. In the engineering sector, talk that the management of FKI may be considering a buyout offer pushed its shares 3.25p higher to 91.5p.

It was thanks to the plethora of takeover stories that the FTSE 100 ended the day 41 points higher at 5,971, while the FTSE 250 rose 66 to 9,978. Wall Street had a lacklustre start to its session. Speculation that Opec might cut output to support the falling crude price pushed BP 8p higher to 587p, BG Group 16.5p better to 660p and Cairn Energy up 38p to 1,894p.

British Energy fell 0.5p to 590p, hurt by ING Financial. The broker urged investors to abandon the stock, pointing out that the group is up against falling energy prices and rising costs. Senior employees sold down their holdings of SThree, the IT staffing group. Its shares dropped 5.75p to 322.25p as UBS placed 6.8 million shares on their behalf at 317p.

Burren Energy retreated 28p to 846p as brokers KBC Peel Hunt and Seymour Pierce sold 7.7 million shares at 830p on behalf of First NIS Regional Fund, an early stage backer of the company. The fund was forced into disposing of its £64m holding because it is in the process of being wound-up. Atul Gupta, Burren's chief executive, and Andrew Rose, the finance director, both topped up their holdings in the placing. They bought 13,500 shares in total.

At the small company end of the market, Gulfsands Petroleum dropped 2.25p to 89.5p after it reported a drop in first-half pre-tax profits to $1.4m from $2.5m. However, the AIM-listed Texan oil and gas group said it was optimistic about the second half of the year. Avocet Mining added 9p to 103.5p as Nigel Scott, its chairman, disclosed the purchase of 100,000 shares at 91p, taking his total holding to 6.1 million, or 5 per cent.

Pace Micro put on 4.5p to 61.5p on the back of a deal to supply its digital set-top boxes to the US cable operator Comcast. The contract means that Pace now supplies the two biggest operators in the world, DirecTV for satellite and Comcast for cable.