Shares in Boots jumped 4% today as investors pondered whether a private equity bidder could yet derail the retailer’s merger with Alliance UniChem.
The speculation sent Boots to the top of the FTSE's risers board in a session when market chatter appeared to be the driving force behind many major moves.
Cable & Wireless, Lloyds TSB and P&O were also driven by investment talk as the FTSE 100 Index took a stride back towards the 5800 barrier with a gain of 13.1 points to 5772.4 by the close. It had been 31 points higher by mid-afternoon but drifted following a lacklustre opening in New York.
The prospect of rate hikes and inflated oil prices dampened enthusiasm in the United States, while London was on edge ahead of a busy week which includes BP’s results tomorrow, GlaxoSmithKline on Wednesday and Unilever the following day.
C&W led the risers board for much of the session but was overhauled late on as the Boots speculation regarding a private equity interest gathered strength. The retail stock closed 4% stronger – up 27.5p at 675p.
The telecoms group closed 3.75p higher at 101.25p, a gain of almost 4% as shares put back some of the losses seen last week following its warning that UK profitability had been deferred to 2008 at the earliest.
The rise followed reports of a management reshuffle and plans for the withdrawal of internet arm Bulldog from the retail market.
Elsewhere, Argos owner GUS rose 16.5p to 1066.5p after the Sunday Times linked two American private equity firms to a possible £6 billion move on credit checking arm Experian.
Lloyds TSB shares also benefited as investors took a further punt on the chances of it being the subject of an overseas takeover. Shares lifted 4.5p to 525.5p, although this represented a slide from earlier in the session.
Market talks also had a negative effect, with P&O drifting 12.25p to 537.75p after it was reported that Singapore-based PSA will walk away from a bid battle with Dubai Ports World.
And British Gas owner Centrica eased 3% or 8.5p to 284.75p as last week’s excitement over a possible bid from Gazprom faded and Ofgem said customers would save at least £60 per year by switching to another gas supplier if they have never done so before.
Other energy stocks fared better with International Power up 7.5p at 281p and Scottish & Southern Energy ahead 23.5p to 1123p. However, Cairn Energy slipped 61p to 1904p following a broker downgrade.
The key development in the second-tier came with Reg Vardy’s support for a new takeover bid from Pendragon – worth £506 million and trumping rival Lookers.
That proved too much for Lookers, which announced it would not be continuing with its interest in Vardy.
Vardy closed 37p higher at 895p, while Pendragon gained 36p to 549p and Lookers fell 33.5p to 573.5p.
The biggest Footsie risers were Boots up 27.5p at 675p, Cable & Wireless ahead 3.75p at 101.25p, International Power up 7.5p at 281p and Persimmon ahead 35p at 1350p.
The biggest Footsie fallers were Cairn Energy down 61p at 1904p, Centrica off 8.5p at 284.75p, P&O down 12.25p at 537.75p and Northern Rock off 22p at 1075p.