Colgate stock up on Reckitt deal talk, company mum

Colgate-Palmolive Co shares hit a new year high on Wednesday after a report suggested that the toothpaste maker could be close to linking up with Lysol maker Reckitt Benckiser Group Plc.

The Telegraph reported online that Britain's Reckitt is close to announcing a "multi-billion pound cross-border transaction," but said it was unclear what company Reckitt was targeting.

The report said that SSL International has long been seen as a target for Reckitt. It also said that "well-placed sources" thought Colgate was the most obvious candidate, but did not disclose those sources.

Shares of Colgate jumped as high as $87.39 before ending the session up 3.7 percent at $85.87. Colgate issued a press release to say it does not comment on unusual market activity. It said the New York Stock Exchange had contacted the company about its share move.

Officials at Reckitt could not be immediately reached for comment.

"Colgate is a very attractive company given its Latin American distribution but its similar size to Reckitt would suggest a merger is more likely than an acquisition," said Sanford Bernstein analyst Ali Dibadj, who follows Colgate.

Speculation of a deal with Reckitt fueled an all-out feeding frenzy in its call options, according to Interactive Brokers Group equity options analyst Caitlin Duffy.

About 63,000 Colgate call options changed hands, 21 times their recent average daily turnover and more than double the amount of its put options, according to option analytics firm Trade Alert.