Barclays shares soar on bid talk

The shares jumped despite the group's outgoing chairman, Matt Barrett, confirming yesterday that he had exercised share options and sold 2.3 million shares on Thursday, netting 6.5 million.

City experts said the sale by the chairman suggested there had been no exploratory takeover approach to Barclays from another bank, as the timing then would have been controversial. Barrett, who is succeeded by Lazards investment banker Marcus Agius on 1 January, now holds just 2,000 shares.

Barclays shares closed up 3.2 per cent, or 23p, at 730p after surging 4 per cent on Thursday. The stock at one stage touched a record 741p yesterday.

The fillip to the latest burst of speculation came from a research note from a leading banking sector analyst. Merrill Lynch said: "We believe Bank of America is very interested in acquiring Barclays. Bank of America has previously indicated that the next stage of its expansion is to become a leading global commercial and investment bank."

Merrill continued: "We estimate BAC could pay a 25-30 per cent premium for Barclays and still make the deal modestly cash-earnings-per-share accretive."

Merrill said it thought Barclays could provide the American bank with a strong investment banking operation that would complement its own, and the leading UK credit card business in Barclaycard that could be merged with BAC's own credit card operation.

It would also give BAC a large UK retail and commercial bank, with "efficiency improvement opportunities".

Colin Morton, fund manager at Rensburg Fund Management, said: "Could it happen? Yes. Is it likely? Probably not. But, the type of market we're in at the moment, everybody is very jumpy about anything that might have a bid story to it."

On Thursday trading volume of over 64 million Barclays shares was about double the daily average. At last night's closing price, the British bank is valued at nearly 50 billion.

Meanwhile, rival Lloyds TSB, the parent group of Scottish Widows, closed up nearly 1 per cent at 555,5p on related takeover speculation, ahead of Lloyds's trading update due on Monday.

Some in the industry, however, are sceptical of one of Britain's big four banks - also including HSBC and Royal Bank of Scotland - being taken over. Mark Thomas, a banking specialist at Keefe Bruyette & Woods, said: "We don't believe UK banks want to sell out. A takeover of a UK bank is very unlikely."

One of the former doyens of the British banking sector, Sir George Mathewson, who stepped down from RBS last April, said at that time: "Most UK banking consolidation has been done. I know all these guys [leading American bankers].

"We are talking about a handful of global banks, all of which have said they are not interested in doing it [mounting a UK takeover]."

BROKER UPGRADE BOOSTS FORTH PORTS

SCOTTISH port operator Forth Ports hit fresh highs yesterday as a major broker ungraded the stock and renewed takeover rumours ran through the city.

UBS upgraded the group to "neutral" from "reduce" in a research note, despite reducing its forecasted earnings per share.

Upping the target price from 1,750p to 2175p, the Swiss broker said shares in the ports operator were benefiting from takeover speculation. EPS forecasts for 2006 were cut by 26 per cent to 47.9p in light of an expected lower contribution from property this year.

The upgrade came amid rumours that Deutsche Bank's asset management arm could be nearing a takeover approach on the group.

Shares in Forth Ports rose more than 4 per cent to 2,191p, valuing the company at just under 1 billion.

Last month there were rumours Australian bank Macquarie, specialists in buying infrastructure assets, was preparing a 2,300p takeover bid.