Analysts believe the Toronto-listed fund manager has the firepower to complete such a coup, while the most up-to-date reports say it has already appointed a team of lawyers and corporate financiers to advise it on the deal.
Such talk helped Amvescap close 14.25p higher at 427p. Bear Stearns was heard telling its clients that a bid from CI could value the fund manager at anything up to 460p a share, thanks to the cost savings that a tie-up between the two is likely to generate. There were also suggestions that Martin Flanagan, Amvescap's new chief executive, will make a tidy sum if the company is taken over.
Traders who piled into the stock yesterday were hoping that news of a deal might come as soon as today, when Amvescap is due to announce its first-half results. The figures are unlikely to make pleasant reading. The company is forecast to reveal a 6 per cent drop in profits to £142m and warn that cash continues to exit its US mutual-funds business.
Elsewhere in the FTSE 100, BT Group dropped 1.25p to 226.26p after Deutsche Bank and Nomura Securities downgraded their stances on the fixed-line telecoms carrier.
Deutsche cut its rating to "hold" from "buy" and expressed concern that BT's results last week revealed weaker-than-expected cash flows. Nomura downed its stance to an outright "sell" and told investors that the premium rating the stock enjoys compared with its rivals is unwarranted. The Japanese-owned broker argued that France Telecom offers better value to investors. The FTSE 100 rose 8.5 points to 5,290.8.
Major political events hit the stock market in two ways yesterday. Second-line oil explorers performed strongly after the surge in the price of crude that followed news that Saudi Arabia's King Fahd had died. Venture Production jumped 27p to 462p, Cairn Energy added 44p to 1,544p, Tullow Oil rose 5.25p to 196.5p and Soco International put on 11.5p to 661.5p.
The worry in the market is that a period of political instability may be on the way in the world's largest crude-producing country, especially because King Fahd's successor, Crown Prince Abdullah bin Abal-Saud, is an octogenarian.
Meanwhile, White Nile dropped 12.5p to 88.5p amid concerns about the future of Sudan after the death of John Garang, the leader of the rebel movement in the south of the country. Mr Garang's death, in a helicopter crash, has sparked rioting and led to doubts about the country's ability to implement a peace deal he signed earlier this year that ended 20 years of civil war. WhiteNile is 50 per cent-owned by Mr Garang's southern rebels.
Among smaller companies, Circle Oil dropped 1.25p to 35.75p on rumours the group is putting the finishing touches to a major fund raising. Dealers talked of the equity issue being priced at 30p, with the cash to be used for an acquisition. Dignity rose 6.75p to 372.5p after strong trading at the funeral-services group, while SDL ticked 0.5p higher to 140.5p on whispers it is close securing a contract win in China.
Lupus Capital, where investors hope that Greg Hutchings can recreate the success he had building up Tomkins, rose 1p to 13.5p. The rise prompted talk that Lupus may soon unveil its long-awaited acquisition. Back in April, Mr Hutchings is believed to have come within a whisker of buying a major waste-management business but was said to have lost out to a private equity firm in the final stages of the bidding process.
There was yet more director share-buying at Walker Greenbank, up 0.5p to 17p. Ian Krikham, the chairman of the wallpaper maker, bought 100,000 shares at 16.75p and a further 50,000 at 16.5p. This followssimilar purchases by directors in June. Walker Greenback is enjoying a revival at present. It is making an operating profit for the first time in six years.
This renaissance at the group is great news for Peter Gyllenhammar, the Swedish investor. He focuses on taking substantial stakes in old economy companies with either strong brand names or rich with fixed assets, and has a 27 per cent shareholding in Walker Greenbank. The Swede recently had to write-off the value of substantial stakes in the carpet maker Gaskell and the chemicals group Yorkshire. But he should be well in the money with his bet on Walker Greenbank.
Finally, Screen Technology had a solid debut on AIM. The display-screen specialist floated at 63p, having raised £8m, and closed at 64.5p.
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