After last week's downgrade by its own broker, department store group Debenhams is being given a lift today by takeover talk.
Milestone Resources - an investment group headed by Micky Jagtiani, the boss of Dubai retailer Landmark - has built up a 7.37% stake in the struggling retailer. That seems to have set the cat among the pigeons, with traders trying to fathom Milestone's intentions. Icelandic group Baugur also has a chunk of Debs and optimists have long been hoping for a bid from this quarter. In July Baugur ruled itself out of any offer for six months.
Kaupthing analysts commented this morning: "A recently announced 7% stake in Debenhams, under the name of Milestone Resources, is thought to be Landmark Group - a multinational, multibrand retailer from the Middle East. They were recently involved in the bidding process for New Look which ultimately failed. Landmark will be very familiar with the Debenhams name and the format not least as Debenhams trades in the Middle East with its franchise operations.
"Current trading at Debenhams is thought to be tough, as it is for the rest of the clothing industry in particular, albeit taking market share. Whether or not Landmark's positioning in Debenhams is backed by greater intent at this stage remains to be seen. However, with deep pockets and a global retail vision, they would be well positioned to take advantage should debt start to get in the way at Debenhams. This news should provide some much needed relief to the recent negative sentiment/ speculation on trading."
So it has proved and Debenhams is now 12.5% higher at 85.25p.
Overall the mood is a bit more upbeat today. Inflation is lower than expected, Northern Rock is boosted by news the government has stepped in to guarantee more of its liabilities, the Bank of England is injecting £10bn and the ECB up to $500bn into the markets to improve liquidity and there is even a bit of bid news.
With Northern Rock up around 4%, the FTSE 100 is now sitting 49.4 points higher at 6327.2.
The takeover news involves internet auction firm Tradus (formerly QXL Ricardo), which is being bought for £18 a share in cash - £946m in all - by South African media group Naspers. Tradus is 11% higher at £17.98.
