Caffe Nero buy stirs bid buzz

BID rumours swirled around troubled cafe chain Coffee Republic today after arch rival Caffe Nero bought up a 4.3% slice of the company. Shares in London-focused Coffee Republic, which effectively put itself up for sale by announcing a strategic review last week, jumped 1 1/2p to 4 1/2p, marking a 38% gain on the day.

Caffe Nero bought 9.7m shares in the group late last week for about 2 3/4p each. Sources at the company described the move as 'strategic' rather than a prelude to a full takeover offer but that did not stop the bid rumours.

Fast-growing Caffe Nero would probably have to convince hi-fi mogul Julian Richer if it were to make a bid. Richer recently built his stake up to 16%, making him the largest single shareholder. He has expressed his wholehearted backing for founder Bobby Hashemi, who has returned to take the helm at Coffee Republic as executive chairman.