By David Jones

LONDON (Reuters) - Reckitt Benckiser shares rose as much as 3.7 percent on Thursday on a report of a link-up with U.S. peer Colgate Palmolive , but analysts were sceptical over an immediate tie-up between the two.

A spokeswoman at the household cleaning goods group had no comment on the media report, while Colgate's CEO Ian Cook also declined comment in an interview with Reuters earlier on Thursday in China.

A potential deal would link Reckitt's products like Finish dishwasher detergent, Lysol disinfectant and Cillit Bang cleaner with Colgate's toothpaste, soaps and oral care products.

"No comment. We don't comment on market rumours. Period," Cook told Reuters when questioned about a Reckitt link-up.

Reckitt shares rose to a high of 32.20 pounds and were trading up 2.6 percent at 31.85 pounds by 1:15 p.m., while Colgate shares ended Wednesday 3.7 percent higher at $85.87.

"We are sceptical on the imminence of a deal between the two," said analyst Charlie Mills at Credit Suisse.

Mills said he was not aware of any immediate catalyst for a deal to take place, but if a deal were to happen it would most likely be a merger of equals. Reckitt is valued at $37.2 billion (22.4 billion pounds) and Colgate at $41.2 billion.

"Strategically a merger doesn't make sense for Colgate," said Bill Pecoriello, CEO of ConsumerEdge Research.

Other analysts also doubted whether there would be a link-up between the two highly rated stocks, as it would be difficult to structure a deal to give value to all shareholders and keep both management teams happy.

"This feels a bit thin, it would be very difficult to structure a deal between the two," said another analyst.

The share price rises were prompted by a market report in the Daily Telegraph newspaper which said takeover activity surrounding Cadbury had led to bid speculation elsewhere, and cited talk that Reckitt was close to announcing a deal -- with the most obvious candidate being Colgate.

The report related this speculation to a Nomura analyst note earlier his year which said Colgate could merge with a British company, but the Nomura analysts thought Unilever would be the U.S. company's more obvious partner.

(Additional reporting by James Pomfret and Jessica Wohl; Editing by David Holmes and David Cowell)

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Last updated: 19 November 2009, 13:31

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