Shares in Newscom rose by 235p to 1,252.5p yesterday after Gannett, publisher of USA Today, said it had approached Newscom with a cash offer.
David O'Brien, an analyst at CSFB, said an alliance between Newscom and Johnston would produce substantial cost savings following the Scottish company's purchase of Portsmouth & Sunderland Newspapers. "It would be quite a good fit... Johnston would be able to take costs out of Newscom's head office and printing operations."
Gannett gave no details of its offer, but Newscom's market value at yesterday's close was pounds 306.36m.
Newscom's board of directors said it had rejected the approach and advised its shareholders to take no action as the offer "seriously undervalued" the company.
A spokesman for Gannett said the company was "still interested" in Newscom and expected to hold talks soon.
Gannett has already sought regulatory approval from the Secretary of State for Trade and Industry. An investigation by the Competition Commissioncould take about six months.
The US publisher is aiming to bolster its presence in the UK by buying regional newspaper groups. In July it bought Newsquest for pounds 904m.