Speculation is growing that Photobition directors were on the hunt for backers to take the company private in a management buyout deal.


The companys share price, which has see-sawed over the last year from a high of 444.5p to a low of 34.5p, immediately gained 4.75p to 55p on the back of the reports.


The graphics group is understood to have made initial approaches to venture capitalists in order to raise enough backing for the move.


Speculation of an MBO led by chief executive Eddie Marchbanks has been fuelled by reports of a mystery predator who has been building up a stake in the company.


Louise Barton, an analyst at Investec Henderson Crosthwaite, Photobitions house broker, said it might not necessarily be a good move for the management to go private.


You wouldnt then have access to the capital markets that are available at the moment, she said.


Venture capitalists might also shy away from putting money behind the management team due to the high level of company debt. Barton warned that backers would have to raise around 145m for the firm taking into account its 100m-plus debts.


Although the company is cheaper than it was, due to the major decline in share price, it is still not cheap, added Barton.


A spokesman for the company said there was nothing to say at the moment about the recent stories about the venture capital situation.


The graphics group has embarked on a rationalisation programme this year.


Story by Sally Nash