Amid yesterday's rout the rock solid performance of Edinburgh Fund Managers set tongues wagging. While the FTSE 100 crashed through its post-September 11 lows, EFM gained 7.5p to stand at 278.5p.
If the tittle-tattle is to be believed, takeover talks with Hermes - the fund management group spun out of the BT pension fund - are back on. Hermes abandoned plans to buy the troubled Scottish company in March because it was worried that EFM's biggest client, Edinburgh Investment Trust, would withdraw £1.2bn of funds to a rival company.
That proved to be a smart decision, as EIT announced in May that the mandate to manage the funds had been put out to tender.
However, it seems that Hermes has had a change of heart and, according to the gossips, an offer in excess of 350p-a- share is on the table. EFM was trading at 460p following the end of the talks in March.
What prompted the rethink remains unclear, although sector watchers point out that the logic of the deal has never gone away - EFM will give Hermes the different style of fund management it needs.
Hermes' traditions lie in passive management, running investment portfolios that track the major indices. Edinburgh, on the other hand, has expertise in active management, picking stocks and sectors that will outperform the market.
In addition to that, EFM will also give Hermes the platform it needs to break into the retail investment market, ending its days as a static money manager for BT pensions.
In the wider market, there was the first real whiff of panic in the air as another £30bn was sliced off the value of leading stocks. Nearly 3bn shares changed hands as the FTSE 100 plunged 154.2 points to 4392.6 - its lowest level since April 1997, and racking up its losses in the past two sessions to nearly 300 points.
Much of the selling was again attributed to German and Swiss insurance companies offloading equities to buy bonds in order to protect their solvency margins. Traders said they had done most of their business in the futures market, where 72,000 FTSE 100 futures changed hands, against a more usual 30,000.
Vodafone led the market lower as it became the latest company to have its accounting practices questioned in the wake of the WorldCom scandal. Although the mobile phone group moved quickly to discredit rumours of financial irregularities, it shares still ended 5.5p lower at 80.5p - a four-and-half year low.
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