PARIS (AFP) - Shares in Havas rose sharply in early trade, extending last week's gains, on persistent speculation that the French advertising company could become a takeover target of British group WPP, dealers said.
The share price also was getting a lift as the subscription rights of the company's capital increase began trading, dealers said.
Havas shares were trading up 6.20 percent at 42.28 euros near midday, while the CAC 40 index was down 0.47 percent at 3.656.39 points.
On Friday Havas shares closed 2.13 percent higher after WPP Group chief executive Martin Sorrell said that he had been in talks with businessman Vincent Bollore, who is the largest shareholder in the French advertising company, fuelling speculation that Bollore could sell his stake to WPP.
Shares in Bollore, which owns 13.6 percent of Havas, slipped 0.36 percent to 275 euros.
Sorrell's comments, published in the British newspaper The Guardian, have pushed the stock higher "on pure speculation on a share that isn't very expensive", an analyst in Paris said Monday. "This speculation appears to be gaining credibility among a growing number of people."
Analysts at brokers Cheuvreux wrote in a client note that "the intentions of the two parties (WPP and Bollore) aren't clear -- with WPP having to integrate Grey Global which it acquired two weeks ago", commenting that "speculative interest remains on Havas".
WPP said it would acquire US rival Grey Global in a cash and stock deal worth 1.520 billion euros (1.87 billion dollars), winning the bidding battle for Grey over Havas, which had declined to boost its initial offer, and US private equity firm Hellman and Friedman.
Global Equities dealer Frederic Boissel said that Monday's share rise had a double-barreled impetus.
"Havas is being pushed higher by continued takeover speculation and technical reasons as the subscription rights of the company's capital hike start today."
The company has said it plans to raise 404.3 million euros (495.9 million dollars) by selling shares at a discount to existing shareholders to repay convertible bonds due 2006.
Under the capital increase, shareholders can subscribe to two new stocks for five they already own for 3.30 euros per share.
The subscription period runs from Monday until October 6. The new shares will be issued and start trading on October 19, Havas said.