Construction firms turn the City into hive of activity on a jam packed Merger Monday

Acquisition and buy-out rumours dominated City trading floors as investors kick-started the week with a “merger Monday”.

FTSE 250-listed builders’ merchant group Grafton Merchanting announced it had bought Leyland SDM — the DIY chain which has branches in King’s Road and High Street Kensington — for £82.4 million.

Grafton said it was regarded as one of the “most recognisable and trusted” decorating and DIY brands in central London selling paint, tools, ironmongery and accessories. Grafton shares ticked 6.5p higher at 759.5p.

AIM giant Breedon Aggregates — valued at £1.1 billion — confirmed it is in talks to buy the Lagan Group, one of Ireland’s largest private companies. Led by boss Kevin Lagan, it has annual sales of £350 million.

Lagan would give Breedon a substantial foothold in the Irish building materials market and shares climbed 0.3p to 76.8p. However, Breedon did caution that there is “no certainty” the deal will happen.

Sticking with AIM, Gordon Dadds Group completed the acquisition of Cardiff solicitors Thomas Simon Limited for £1.88 million. Gordon Dadds is a consolidator in the legal middle market and shares were up 5.9p at 1717.9p.

And finally, engineering firm James Fisher & Sons snapped up Cowan Manufacturing for £1.5 million. Cowan is based in New South Wales and its major customer is the Australian navy. James Fisher & Sons shares were off 10p at 1488p.

Overall it was a slow start on the FTSE 100, which sank 5.12 points to 7289.85.

Reckitt Benckiser was leading the index lower after the condom-maker’s fourth-quarter earnings failed to impress. The firm has had a rough ride lately and last October revealed it would restructure into two main units - health and hygiene. Reckitt shares lost 416p at 6149p.

N Brown rose 3.6p at 192.7p as it announced that Matt Davies is leaving Tesco as UK chief to become chairman.

It ends a long drawn out process to find a replacement for Andy Higginson who announced back in June he would be leaving the business to join private equity.

Davies had previously run Pets at Home and Halfords and he will need to call on all his experience to revive the fortunes of the plus-sized fashion retailer, which counts Jacamo, advertised by Freddie Flintoff, as one of its brands.

Investors are also gearing up for a big week of earnings, with the banks all set to post numbers.

Dart Group shares charged up 88.5p to 738p after it upped its profits expectations for the year.

The Jet2.com airline owner is no longer having to slash prices to sell tickets after benefiting from the demise of rivals including Monarch and Air Berlin, much to the relief of its board and investors.