Spotlight on Go-Ahead as takeover talk revs up again

Could there be a change at the wheel for Go-Ahead?

That was the question being mulled over today as City gossips revived takeover talk around the bus company.

Speculation suggesting it could attract a potential aggressor meant it became the latest in the transport sector to find itself under the bid spotlight following last year's £1.59 billion acquisition of Arriva by Germany's Deutsche Bahn.

Since then, National Express - the subject of a failed approach from private equity firm CVC back in 2009 - has attracted takeover rumours, while although there has been less noise around Go-Ahead, UBS said in the summer that "a bid [for the group] could... materialise in the medium term".

However, as Go-Ahead eased up 33p to 1225.5p, traders played down the whispers, pointing instead to Espirito Santo giving it a "buy" rating.

Meanwhile, analysts noted that the company is almost completely exposed to the UK, although they did concede it was smaller than its peers and therefore potentially more attractive.

On the last day of a month in which the FTSE 100 has shed 4%, the benchmark index slipped a further 16.01 points to 5320.99 after Standard & Poor's slashed its ratings on 15 banks.

HSBC, down 5.75p to 480.78p, Barclays, off 2.3p at 166.83p and Royal Bank of Scotland, up 0.11p to 19.65p, all had their ratings downgraded while a number of their US peers suffered the same fate.

However, the banks were not the day's worst performers as falling metal prices helped the mining sector dominate the losers' list, with Eurasian Natural Resources dropping 22.5p to 610.5p while Xstrata was 33.1p lower at 921.85p.

At the other end, the drug makers were getting a boost from supportive analyst comments as well as their defensive qualities.

Saying that the sector was in the process of "reinventing itself", Citigroup flagged up GlaxoSmithKline - 14.5p ahead at 1381.5p - as one of its favoured picks.

The broker also initiated coverage on Shire with a "buy" recommendation, and it ticked up 30p to 2075p.

Bearish whispers last week that Cairn Energy was about to release some bad news from its controversial Greenland operations were shown to be true, as the oil explorer revealed it was plugging and abandoning two of its wells.

With the announcement the latest in a long run of disappointing results from Cairn's campaign, it was left 11.4p worse off at 263.6p.

After seeing a rise late in trading yesterday off the back of revived takeover speculation, Aviva retreated 2.4p to 300p, despite vague chatter suggesting the insurer could attract as many as three possible bidders.