Tesco bosses have refused to deny a possible tie up with Marks & Spencer even after shareholders saw the value of the former's stocks plummet this week. The continued speculation saw M&S stocks climb as high as 332.5p in the early part of the week until eventually falling back to just below the £3 mark. Tesco, meanwhile, plummeted from a high of 188p at the beginning of December to 169.25p on Thursday as the City baulked at the cost of any potential takeover. City analysts are shaking their heads at the possibility of a tie up with M&S and shareholders left company bosses in no doubt that they have bought into Tesco's international strategy. They do not want to see it embroiled in the fading fortunes of M&S at the expense of the bigger goal. The argument a M&S/Tesco combine would counteract a leap in domestic market share from a possible Asda/Safeway tie up has also been dismissed by the bulk of City sources. Salomon Smith Barney's David McCarthy said: "Buying an ageing high street retailer does not fit with Tesco's clear strategy for international development and the internet. It was regarded by investors as a major distraction from the search for global position." Any formal statement denial by the Tesco board would rule it out of any bid for six months, according to Stock Exchange rules. It also can't benefit from any other party's deal broking. While Tesco shares have started to climb again ­ making it less vulnerable to foreign predators itself ­ M&S has seen its fortunes slide once more. A bid by financier Philip Green ­ who has been in the frame since before Christmas ­ is not seen as particularly credible, at least in some quarters of the market. Any domestic merger activity among the food retailers looks increasingly unlikely until the Competition Commission reports in April - although sources suggest this could be as late as the autumn. {{NEWS }}

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