Singer soars on Icelandic approach

The investment bank Singer & Friedlander is in talks over a possible takeover by its Icelandic rival Kaupthing, sending its shares 15 per cent higher.

The investment bank Singer & Friedlander is in talks over a possible takeover by its Icelandic rival Kaupthing, sending its shares 15 per cent higher.

Singer said yesterday it was in "early stages of discussions" with Kaupthing and stressed there could be no certainty that the talks would result in a deal. Kaupthing already owns 19.5 per cent of Singer. The Icelandic investment firm Burdaras holds 9.4 per cent, putting the combined holdings just below the 29.9 per cent threshold that would trigger a mandatory bid if they were acting together. Burdaras is linked to the Icelandic bank Landsbanki, which acquired the UK broker Teather & Greenwood last month.

Singer shares jumped 41.5p to 322p yesterday, valuing the company at £555m. The stock has been buoyed by bid speculation since Kaupthing first began building its stake in the autumn of 2003, at about 180p.

Neil Welch, an analyst at Shore Capital, said: "We see no reason why Singer & Friedlander shouldn't attract interest as it is a profitable, well-run company." He said an offer price of 390p a share was "not unachievable," based on a 30 per cent premium over fair value at 306p.

Katrina Preston, at Bridgewell Securities, was more cautious. "We have maintained that any bidder would need to be confident that it could materially enhance Singer's profitability in order to justify a valuation much above 250p," she said. She thinks it unlikely that a counter-bid will emerge at the current levels.

If the takeover goes ahead, Kaupthing would be the latest Icelandic company to expand in the UK. The investment company Baugur is considering a bid for the supermarket chain Somerfield after buying Big Food, which owns the Iceland frozen food chain, in December.

Kaupthing is Iceland's largest bank, with operations in 10 countries including the US, UK and Switzerland. It was one of three banks that financed Baugur's £326m takeover of Big Food.

Singer sold off its stock-broking interests in recent years and now focuses on private and commercial banking, asset finance and fund management.