There was a raft of takeover excitement among the UK's mid-cap companies today.
For a start, Workspace, which specialises in letting accommodation to small and medium sized businesses, added 12p to 357p as Jack Petchey's Trefick group declared a 21% interest.
The company said it had been told, "verbally by a representative of Trefick, that [it was] interested in ordinary share capital amounting to approximately 21% through contracts for difference". Workspace added that no formal notification had been received.
Isle of Man-based entrepreneur Petchey, who is now in his eighties, is noted for taking stakes in undervalued companies, and often plays a pivotal role in takeover situations, including in the past Aston Villa, car dealer Reg Vardy and Wyevale Garden Centres. He is believed to have dabbled in Workspace shares before.
Tom Gidley-Kitchin at Charles Stanley said: "Normally one would assume that a CFD position would be for trading purpose - as well as avoiding stamp duty - but, with a holding of this size Trefick must surely be fairly confident that a bid for the company is forthcoming or else that it will somehow be able to convert its CFD position into an actual shareholding. In the latter case it would be able to deliver a material holding to any bidder, indeed its agreement on price would be a major priority for any bidder."
Oil services group Abbot jumped 63.75p to 355.5p. The company confirmed reports it had received a takeover approach, with the predator widely believed to be private equity group 3i.
Oriel Securities said: "3i is understood to have made a 375p indicative offer valuing Abbot at about £870m but there has been no comment from either company. The executive chairman, Alisdair Locke still owns 13% but we wouldn't see him standing in the way of a 'good' offer. Negotiations may still be at a preliminary stage and there may be a risk that this deal will not be completed. However, we see the shares performing strongly today and would buy up to 320p."
Perennial takeover target SSL International, the Durex and Scholl group, climbed 27p to 466p. Credit Suisse upgraded from neutral to outperform, raising its target price from 450p to 500p. "Should a third party bid for the company, we believe SSL shares could be valued up to 710p based on previous over-the-counter transaction multiples," said the bank. Johnson & Johnson, Reckitt Benckiser and Procter & Gamble have all been mentioned as possible predators in the past.
Meanwhile engineer Bodycote was 9.25p better at 281.25p after Swiss rival Sulzer - whose £1.1bn bid was rejected earlier this year - did not rule out a return to the fray.
Of course, the bid speculation was not confined to the medium-sized companies.
Barclays, which looks certain to miss out in the battle to buy ABN Amro, was 15p better at 655p. The suggestion was that Barclays could now be vulnerable to a bid from the US, with Bank of America the name in the frame. Traders pointed out that this story had done the rounds before, and the weakness of the dollar would make such a transaction problematic.
Still with banking, Northern Rock rose 9.9p to 161.7p on hopes that a bid would emerge. Citigroup has been appointed to advise Rock and is reportedly willing to put up some of the cash for any potential offer. Later it transpired Northern Rock had seemingly borrowed another £2.9bn from the Bank of England in the past week, taking the total to £10.7bn.
Meanwhile the Bank of England kept interest rates on hold at 5.75%, in line with the majority of economists' predictions. By the close, the FTSE 100 was 12.7 points higher at 6547.9, off its best levels after news of the rate decision and a 4.2% drop in US factory orders in August. The FTSE 250 added 10.3 points to 11,370.5. Traders pointed out that tomorrow sees some key US economic figures, to whit, the non-farm payroll numbers. Last month these were far worse than expected, upsetting the market and increasing the concerns about the state of the US economy. The factory order figures merely reinforced this uncertain mood.
Among the fallers, inter-dealer broker Icap lost 16.5p to 516.5p despite saying in a trading statement it expected full-year profits to be at the top end of analysts' forecasts.
Shore Capital said: "The reaction to the statement in terms of the share price seems surprising to us. The shares have fallen around 3%, which initially we believed to be in relation to some profit-taking, noting the shares have delivered an increase of around 16% since mid-August, but before today's fall. There is some suggestion that investors are shorting the stock, a function of its relatively high multiple, its exposure to a weak dollar and a risk that market conditions may worsen going forward. There is an element of truth in this – the dollar is weak and ICAP does have around 40% exposure to it in terms of operating profits. However, we believe this has been factored in by the market. We have previously put through a £6m adjustment to our figures to reflect this. We see the reaction today as a buying opportunity."
Miners lost ground after a dip in metals prices. BHP Billiton was 45p lower at £17.02, while Rio Tinto dropped 74p to £41.31.
Housebuilder Barratt Developments was 9p lower at 798p after Panmure Gordon issued a sell note.
Pub groups were in favour again, with Marstons up 5.5p to 370.25p after a confident trading update, although the recent floods are likely to knock £2m off full-year profits while there will also be a hit of around £3m due to its exposure to a rise in short-term interest rates. It has now changed its borrowing arrangements to fixed interest rates.
Lower down the market, dealers reported some buying interest in broadcast-equipment group Vislink, up 5.25p to 75.5p. Computer services group Axon added 2.5p to 840p despite talk of a line of stock being placed on behalf of one of the directors.
Finally online search company Infoserve fell 8p to 28.5p as it warned that difficulties in increasing its telephone sales force meant revenue growth would be lower than market expectations.