Almost pounds 800m was added to the value of Cable & Wireless yesterday as the shares jumped 37p to 466p on takeover speculation. At yesterday's closing price, the company is valued at slightly more than pounds 10bn.
The speculation came in spite of a denial by Craig McCaw, the American billionaire, that he was gearing up to mount a bid. The City linked Mr McCaw with C&W before Tuesday's late news of the shock departure of both the company's chairman, Lord Young, and James Ross, chief executive.
Their departures followed two days of talks that failed to resolve the bitter power struggle between the two men. Yesterday, traders took the view that the resignations left the company vulnerable to a bid.
"The speculation is entirely predictable," Laurence Heyworth, telecoms analyst at Flemings, said. "However the speculation is rather more predictable than the actual chance of a bid."
Analysts said that if the company wished to remain independent it would need to appoint a chief executive quickly who would provide a more defined strategy and thereby prevent a break-up.
On Tuesday, the group appointed Brian Smith non-executive chairman and said that a board committee under his chairmanship would be formed to select a new chief executive "as soon as possible".
"The Cable & Wireless board does not want the company to be carved up. They'll want a chief executive to see the good points of the so-called 'federation' and possibly express it a bit better," John Clarke, of Daiwa Institute, said.
Analysts said the departures of Lord Young and James Ross yesterday were welcomed by the market but that Cable & Wireless remained vulnerable and open to a possible bid or a break-up.