Leisure group Whitbread has been tipped as a takeover target for some time, with US property group Starwood Capital and (almost inevitably) private equity groups such as Cinven, CVC and Apax suggested as possible predators.
Today - ahead of the company's full-year results next Tuesday - analysts at Numis have revived the idea of a merger between Whitbread and Mitchells & Butler. "We feel this is a natural end game for the two companies, given that each owns assets that the other operates more effectively," said Numis.
There are, however, others who may well disrupt such a cosy arrangement. Not only is Whitbread said to be in the frame for a bid from elsewhere, but M&B has also been stalked, by property entrepreneur Robert Tchenguiz.
Numis though said: "We can envisage a scenario whereby Whitbread acts as a white knight bidder for M&B should it receive a hostile bid from Robert Tchenguiz."
The broker reckons merging the two companies could generate an extra £33m of operating profit.
As for Whitbread's figures themselves, Numis is forecasting profits of £208m but says the market is likely to be more interested in any news on the proposed sale of the company's David Lloyd Leisure business for a possible £940m.
"We recommend adding to holdings ahead of the results and repeat our £21.48 target price," said Numis. "But we feel there are plenty of catalysts for that to increase to more than £22 over the coming months."
This did little for the Whitbread price today, which slipped 8p to £18.99. M&B edged up 0.5p to 795p, ahead of its promotion on Friday to the FTSE 100 to replace Scottish Power after its takeover by Spain's Iberdrola.
Still in the same sector Punch Taverns fell 12p to £12.77 despite an upbeat note from Panmure Gordon. The broker moved from hold to buy and increased its price target from £13 to £15.
Elsewhere the market slipped back further after its six-and-a-half-year highs hit earlier this week. The FTSE 100 fell 48.4 points to 6449.4, as pressure grew on the Bank of England to raise interest rates again next month. The pound continued to rise, reaching a 26-year high of $2.01.
After yesterday's shock rise in inflation to 3.1% came news that UK average earnings rose by their fastest rate in nearly three years - mainly driven by bonuses - while employment figures showed the claimant count falling for the sixth month in a row. On top of that came the Bank of England minutes for this month's decision to leave rates on hold, which showed two of the nine members of the monetary policy committee voted for a rise.
Jaspreet Sehmi, economist at the Centre for Economic and Business Research, said: "The persistent decline in the claimant count threatens to push wage inflation higher as the available pool of labour is squeezed.
"Average earnings rose by 4.6% in the three-month period, up from 4.2% in the three months to January and above analyst expectations of a 4.2% figure. It is also above the 4.5% level which the Bank of England considers to be consistent with stable inflation. This is likely to be particularly concerning for the Bank given that data released yesterday showed consumer price inflation accelerated to 3.1% in March, breaching the 3.0% target level. Excluding bonuses, the index stayed steady at 3.6%.
"In general, today's data paints a picture of an increasingly tight labour market, which is benefiting from rapid economic growth in 2006. With a growing number of indicators suggesting that inflationary pressures remain rife in the economy, the Bank of England is likely to raise interest rates in May.
"The markets are likely to be surprised by the strength of today's news, which should add to recent gains in the pound as expectations of higher interest rates are increased."
The slide in leading shares was exaggerated however by a number of major companies going ex-dividend. These included BAE Systems, down 11.5p to 453.5p, and Slough Estates, 18p lower at 747p. Property companies in general were under the cosh on the prospects of dearer borrowing, with Hammerson losing 41p to £15.80 and British Land falling 45p to £14.75. The latter has been removed from Merrill Lynch's Europe 1 list.
Engineering consultancy WS Atkins saw its shares climb 137p to 1140.5p after it said profits would beat expectations. This news outweighed the continuing problems at the Metronet tube consortium, where it owns a 20% stake.
Packaging group DS Smith rose 16.25p to 234.75p after it said full-year profits would be ahead of market forecasts.
And music group EMI added 10.5p to 225.75p as a trading statement turned out to be better than had been feared, even though it has suspended dividend payments after two profit warnings this year.
Elsewhere engineering group Bodycote slipped 2.75p to 317p as it rejected a 332p a share offer from Swiss group Sulzer. Sulzer has edged up its offer from 325p, but there is some talk that Sulzer itself could be bid for, which would probably leave the Bodycote bid dead in the water.
ICI was 0.75p lower at 536p despite analysts at UBS raising their price target from 476p to 565p. "We expect some consolidation in the industry and with both Akzo Nobel and ICI with net cash on the balance sheet by year-end, they can both be acquirers or targets," said UBS. It said Akzo would be the most likely bidder for ICI, given the available synergies, and added that it could afford to pay up to 660p a share.
"But we would like to highlight the risk that if there is no bid for ICI or if the company turns into a bidder, there could be significant downside from the current share price," added UBS.
But Associated British Foods jumped 17p to 922p ahead of results next week, when analysts are expecting the company to give a positive assessment of the outlook.
Lower down the market, Bob Geldof's media group Ten Alps added 1.5p to 60p after an upbeat trading statement this afternoon. This revealed the company plans 12 channels on its new public television service, and emphasised the growth of its specialist publishing business, where it now manages 580 titles. Recent trading is said to have gone well, with the company optimistic about growth in the current year.
Going the other way was video and DVD rental company ChoicesUK. It issued a downbeat trading statement, saying the unseasonably fine weather has hit its rental business, even though the performance of games for PlayStation 3 was in line with expectations.
House broker Teather & Greenwood downgraded to hold, saying: "It also did not help rentals of Casino Royale (at £3.99 or so) to have supermarkets selling the DVD at £7. It seems prudent to assume weaker rental performance [in the second half] than we were assuming."
Seymour Pierce was more brutal.
"An unexpected, terse and worrying profit warning has come out from the company, only two weeks and a day after the interim results, which painted a much improving picture," it said. "For the current year we increase our estimated loss from £2.4m to a loss of £4.5m."
Seymour Pierce added that the company may need a rights issue to enable it to trade successfully over the Christmas period. "At the current share price it would be a relatively hefty one in proportion to the size of the company," said the broker as it cut its recommendation from hold to sell.
The company's shares halved to 22.5p.
Finally Jubilee Platinum added 2.25p to a record 116.75p after the metal jumped to a seven-and-a-half-month high. Analysts said platinum and platinum miners had been given a boost by this week's news of plans for a new exchange-traded fund in the metal to be set up by Switzerland's Kantonalbank. ETFs trade futures in precious metals backed up by stocks of the physical commodity, which tends to boost demand.