BRITISH companies top the list of European takeover moves, an American bank revealed yesterday as shares in BT jumped 6 per cent on hopes that a private equity firm may take it private.

Almost half the most attractive takeover targets in Europe are based in Britain, including NTL, the cable business, Rentokil Initial, the hygiene group, and Rank, the casino operator, Merrill Lynch said in a report to clients.

The other European companies ripe for a leveraged buyout include the telecoms companies KPN, of the Netherlands, Elisa, of Finland, and Telekom Austria.

Syngenta and Ciba, the Swiss chemicals companies, and VNU, the Dutch media group, make up the remaining prime takeover candidates, according to the bank. The list of targets emerged a day after new research showed that buyout funds had raised enough cash last year to buy 43 per cent of the FTSE 100 by market capitalisation.

Although they are flush with cash, private equity funds have yet to buy a FTSE 100 company, in part because the highly secretive firms have preferred to keep out of the public glare associated with owning a household name.

However, they have so much money at their disposal now that analysts believe it is inevitable that a significant FTSE 100 company will be bought out this year.

Tom Lamb, managing director of Barclays Private Equity, said: “I am surprised that there hasn’t been a FTSE 100 buyout already, but it is only a matter of time. After all, there have already been plenty of deals much bigger than the smaller members of the FTSE 100.”

Last year’s mega-deals included the €12.8 billion buyout of TDC, the Danish telecoms operator, and the $11 billion takeover of SunGuard Data Systems, an American financial data company.

In recent months private equity funds, such as Blackstone of America, have begun to amass funds of more than $12 billion (£6.84 billion), which dwarf even the largest of a year ago.

This has put all but the biggest 20 of the FTSE 100 companies within the reach of private equity firms, who can club together to finance bids of £20 billion or more, analysts said.

The Times revealed yesterday that BT, the phone company with a market capitalisation of about £18 billion, had become the target of a potential private equity takeover bid. Philip Grose, an analyst at Merrill Lynch, said that the companies that make the best potential private equity targets tend to have a low value in relation to profits.

They also have the ability to pay substantial dividends and steady, reliable cashflows, which can be used to pay down debt, he added.

Private equity firms value a company’s ability to pay dividends because this makes it easier for them to recoup their equity investment in the leveraged buyout at an early stage and so keep their investors happy, analysts said.