Speculation by a high profile Wall Street analyst that Lincoln National's purchase of Jefferson Pilot may be called off sent the stock prices of both companies on a short roller coaster ride Thursday.

Colin Devine of Citigroup suggested in a report that a third party, Prudential Financial, could make a bid to buy Lincoln, which in turn would abandon its deal to buy JP .

For its part, Prudential was taking pains to neutralize the speculation, and Devine was by day's end already offering other scenarios of where Prudential might invest its cash besides buying Lincoln.

"My guess is that the minute a high-profile analyst mentioned Lincoln as a possible target, that Lincoln's purchase price went up, and the window of opportunity for Prudential -- if they were considering it -- shrunk," said Sherry Jarrell, an assistant professor of finance and economics at the Babcock Graduate School of Management at Wake Forest University.

It means the loss of JP's headquarters to Lincoln's Philadelphia offices and threatens the jobs of some of the company's 1,100 local workers. The deal is suppose to close early in 2006.

Thursday's events started when Prudential, the $31 billion insurance and investment company based in New Jersey, announced that it had sold $2 billion in notes, or bonds, something companies typically do to raise stockpiles of cash.

Devine said the sale was surprising and wrote, in a message to his clients early in the trading day, that Prudential already has $3 billion to $3.5 billion in excess cash.

"Using the logic of why build a war chest if you're not going to war," he wrote, "We would speculate the motivation behind this move may be that Prudential is on the verge of announcing its next major acquisition."

Devine said that Lincoln would be the top choice, but others might include Sony Life in Japan and ING's U.S. operations. When his report hit Wall Street, Lincoln's stock shot up about 7 percent, to around $55 a share. It ended the day at $50.98.

Once media requests came in to Prudential, spokeswoman Gabrielle Shanin declined to comment other than to make sure reporters noted that Prudential stated it would be making "fixed income" investments with the money.

That one seemed to back away from the earlier report. It said simply that another scenario is that Prudential could use the money to buy back its own shares in 2006 -- a move that companies do often to regulate the price and number of shares on the market.

Still, Jarrell said that the issue bears watching, especially if Prudential's bond sale is truly unusual and it can get quick access to that $2 billion again and go looking for a merger.

We've had to postpone our plans to allow readers to append comments to individual articles until we can put additional safeguards in place, and we apologize for the delay. Until we are able to present that feature to you, please visit our existing reader forums feature to discuss this or any article.

This is cache, read story here