Shares in drug maker Shire have risen 11.5p to 928.5p after a note from UBS saying larger rival AstraZeneca could afford to pay 1,425p per share for Shire.
"Our cost of capital M&A analysis suggests that AstraZeneca can pay up to 1,425p, greater than a 40% premium, and achieve an economically accretive acquisition," UBS analysts said.
Shire, the UK's third-largest pharmaceutical company, has risen sharply since Friday on talk of a possible bid from Pfizer, the world's largest drug company and maker of Viagra.
This morning, Shire said it was quitting the UK for a new international holding company based in Ireland.
By becoming tax resident in Ireland, Shire will pay less tax on its international sales. Although Shire has assured the market the change will have no material effect on its UK operations, workforce or strategy, it will be seen as a snub to the UK Treasury.
The company said in a statement: "Shire has concluded that its business and its shareholders would be better served by having an international holding company with a group structure that is designed to help protect the group's taxation position, and better facilitate the group's financial management.
"The directors believe that the most appropriate structure is for the new group parent company to be tax-resident in the Republic of Ireland."
The new holding company, to be called Shire Limited, will have the same board and management team as Shire. Like Shire, it will also have its primary listing on the London Stock Exchange.
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