Market Report: Aegis shoots higher on talk of a bid from WPP

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The Independent Online

Bid speculation returned around Aegis last night, as vague rumours suggesting its much bigger rival WPP may be interested in a renewed takeover attempt prompted a sharp rally late in the session.

Aegis is currently in discussions with Ipsos over a potential disposal of its Synovate market research business, amid widespread talk a sale will result in the rest of the group becoming a target. Yesterday, market gossips were suggesting a deal could be imminent, and that WPP – which retreated 2p to 727p – may then take the opportunity to make a move.

According to the chitter-chatter, it may not be the only interested party, with private equity named as one possibility amid rumours a potential bid could reach as high as 250p. Although traders were unconvinced by the tale, Aegis still touched a peak of 162.2p before finishing 3.2p ahead at 160p.

Bid chatter has surrounded Aegis for a while now, with widespread speculation that the group's largest shareholder, Vincent Bolloré – who holds more than 25 per cent of the company – could attempt to merge it with his French company Havas. However, earlier in the year Mr Bolloré signalled he may sell his stake, saying it was a solely "financial investment".

Sir Martin Sorrell – WPP's chief executive – reportedly described parts of Aegis as "interesting" recently, though he also claimed Mr Bolloré was still the most likely to take control of the group. In 2005, WPP made a joint approach for Aegis with the US private equity firm Hellman & Friedman, but ended up pulling out.

With the US debt talks still stuck in a stalemate, the FTSE 100 started off significantly weaker but managed to limit its losses, closing just 9.76 points worse off at 5,925.26. There was no such recovery for the banks, however, as they followed their European peers down, with Moody's not helping by deciding to downgrade Greece's debt rating by three levels.

Lloyds Banking Group and Royal Bank of Scotland dipped 2.02p to 45.1p and 0.58p to 36.28p respectively, while Barclays moved back 10.65p to 228.95p despite Investec keeping its "buy" rating and pointing out that the group's exposure to Greek and Irish government debt is relatively small.

As gold reached yet another fresh record high, Fresnillo was the top blue-chip performer, pushing up 48p to 1,729p. The rest of the miners, however, endured a rather more mixed day, including BHP Billiton. It eased back 14p to 2,359p as the strike at its Escondida project in Chile – the world's biggest copper mine – stretched into a fourth day.

Meanwhile, Marks & Spencer slipped down 5p to 356.1p on fears the high-street institution could be about to face a step up in competition from John Lewis. ING was prompted to reiterate M&S's "sell" rating after its peer announced its expansion plans last week, while traders also highlighted the decision by Redburn Partners to cut its forecasts following a meeting with chief executive Marc Bolland.

Down on the FTSE 250, Invensys gushed forwards 11.3p to 314p in the wake of reports over the weekend claiming the engineer is close to getting rid of the majority of its pension scheme. Speculation has existed for a while that such a deal will turn it into a target for either a takeover or break-up bid, and, not for the first time, companies such as Siemens and CSR were being talked about as possible aggressors.

The saga of Melrose's attempt to buy Charter International rumbled on after the buyout firm said it could return with a new, higher offer if it were allowed to look at the engineer's books. The previous 840p-a-share approach by Melrose – 2p higher at 370p – was rejected earlier this month by Charter, which ticked up 11p to 797p.

Singer Capital's Jo Reedman estimated the group's value could reach 950p a share if "an offer from a third party is received and Charter becomes the subject of a bidding war", though she did warn that if no bid is forthcoming its share price may fall as low as 600p.

Investors hungry for bid developments around Domino's looked set to be disappointed, however, as the pizza delivery company dismissed rumours last week suggesting it could be in the sights of private equity. Nonetheless, it still claimed pole position, rising 23.3p to 482.4p after revealing its pre-tax profit over the first half of the year had jumped up 15 per cent.

There were two major movers among the small-cap companies, including Holidaybreak, which shot up 48p to 367p as it announced it was in talks over a potential bid with an unnamed company, reported to be the Indian tour operator Cox & Kings.

Its move was nothing compared with the one enjoyed by Hansen Transmissions, however. The wind turbine gearbox manufacturer's share price came close to doubling after it surged forwards 31.25p to 65p following the news it had agreed to be bought by Germany's ZF Friedrichshafen for 66p a pop.