EasyNet led the main-market risers after BSkyB confirmed it has agreed to acquire the Internet service provider for £211 million, allowing it to cross-sell broadband connections to its 8 million satellite TV subscribers. EasyNet shares jumped shares jumped 45p to 172p.

BSkyB will pay 175p per EasyNet share -- a premium of 81 per cent compared with the closing price before the offer was made public. That values the internet provider at 22.4 times earnings expectations for 2007. (BSkyB is 37.2 per cent owned by News Corporation, parent company of Times Online.)

"Strategically, we like the deal," said Merrill Lynch. "It enables BSkyB to offer triple play (television, telephony and broadband) and take on cable on its home turf. Also with Easynet having been focussed on businesses, there is a lot of upside on consumers."

Shares of BSkyB was down 3.5p to 515.5p. In addition to getting unbreakable acceptances equivalent to 21.8 per cent of EasyNet shares, BSkyB was also in the market to purchase a further 20 per cent of the company this morning. The chances of a counter-bid were therefore seen as approximately nil.

According to analysts, the offer could be the start of further sector consolidation. Merrill speculated that BSkyB may buy privately owned video-on-demand service Homeshoice, while Insinger de Beaufort was recommended clients buy service provider Pipex Communications.

"The £1 billion recently raised by (BSkyB) gives significant scope for further acquisitions while the combination of Pipex’s large customer base and Easynet’s local-loop unbundling infrastructure would provide BSkyB with an immediately larger footprint and margin widening opportunities," it argued in an e-mail.

Pipex shares closed up 0.38p to 9.38p.

For detailed information about BSkyB, click here.

Dyson (a materials producer, not the maker of vacuum cleaners) slumped 61p to 285p after warning that its contracts hedging against the oil price have lapsed, meaning higher energy costs will lop about 20 per cent off profit expectations.

The company, which makes thermal protection plates for NASA's space shuttle, said fuel costs will dent profit by about £900,000 this year and about twice that next. In June, Dyson said full-year underlying pretax profit was £5.5 million.

For detailed information about Dyson, click here.

Can Tate & Lyle avoid a similar pitfall? According to Lehman Brothers, the sweetner maker's 2007 numbers may be at risk if it cannot get a 20 per cent increase for products such as sucralose. The sugar substitute, better known to diet-soda drinkers as Splenda, provides more than half of Lehman's 2007 earnings forecast.

"Given the cost pressure that food and beverage manufacturers are under and the pressure on their own pricing from consolidation in developed retail markets, we do not believe that 20 per cent pricing on food and beverage ingredients is achievable," the broker said.

Lehman analysts think higher prices will only recover about half of the extra £40 million on Tate & Lyle's fuel bill. "We would avoid the stocks until the recovery position is clarified," they advised.

T&L shares finished off 10p at 456.5p.

For detailed information about Tate & Lyle, click here.

On the upside, MFI rallied 6.25p to 82.5p, having slumped from 108.5p since issuing a profit warning on the first trading day of October. UBS reckoned the drop has now gone far enough.

Next month, MFI  is widely expected to announce a top-to-bottom restructuring under new boss Matthew Ingle. The potential cost of such a move, along with the company's £175 million pension hole, has led him into talks with its lenders about future options (the company insists no banking covenants have been breached).

UBS said it cannot see an easy way to split Howden, MFI's profitable wholesale business, from the retail side. That means the company will probably have to trade out of its current difficulties, with a cash call to shareholders the worst-case scenario if things don't improve.

"With the shares at this price, much hangs on whether one believes a rights issue is likely or not," UBS argued. Raising its recommendation to "neutral" from "reduce", its analysts argued that MFI can avoid printing new equity by selling freehold property and smaller businesses, such as Hygena France. Settling an ongoing tax claim from the Inland Revenue and a legal action with its pension fund advisors would also help.

"We would expect new management – especially with the CEO coming from a Howden background – to take this opportunity to radically downsize the Retail estate and set a trading strategy which targets a higher gross margin," they told clients.

For a graph of MFI shares, click here.

Not much else came from the this morning's broker calls:

UBS moved Intec Telecom Systems to "buy" from "neutral".

Exane BNP Paribas rejigged weightings in its European portfolio: beverage stocks moved to "overweight" from "neutral", with construction firms going the other way. The French broker also raised Legal & General to "neutral" from "underperform" and upgraded EasyJet to "outperform" from "neutral".

Bridgewell started Ted Baker with a "buy" stance.

And Goldman Sachs has initiated coverage of Greencore with an "underweight" stance.

Do you have a comment to make on the markets? Write to Times Online's Business desk at markets@timesonline.co.uk, where we will publish the most interesting e-mails