DHL owner Deutsche Post has made an approach to buy the UK logistics group Exel in a deal that could be worth more than £3 billion.
Exel, which employs around 440 people at its operation at Hams Hall near Birmingham, ended months of speculation when it revealed to the stock market that it was in the early stages of talks.
Overall, the company employs 10,000 people in the Midlands working at its 186 locations across the region which include distribution centres and warehouses and drivers.
Shares in Exel, which delivers products on behalf of numerous UK retailers, jumped by 17 per cent - 173.5p to 1178.5p.
Exel has long been the target of takeover talk given its small size relative to giant competitors such as Deutsche Post.
As well as Deutsche Post, Exel has been seen as a likely bid target for US giant United Parcel Services.
FedEx, Dutch group TPG, Swiss firm Kuehne & Nagel and US giant General Electric have all been named in the past as potential bidders.
Exel employs 109,000 people worldwide and has itself been active in the consolidation of the logistics sector after paying £328 million for UK rival Tibbett & Britten last year.
In a brief statement yesterday, Exel said: "Discussions are at a preliminary stage and there can be no certainty as to their outcome. A further announcement will be made in due course."
Deutsche Post has repeatedly declined to comment on rumours about Exel.
It is expanding its DHL express courier and logistics business and wants to further grow its mail business abroad in order to reduce its dependence on the domestic German postal market, where its monopoly is due to end in 2007.
" Deutsche Post has approached Exel with respect to a possible offer," Deutsche Post said. "Discussions are at a preliminary stage and there can be no certainty as to their outcome."
Officials at the two companies declined to comment further.
Any acquisition by Deutsche Post would add a company whose customers include Hewlett-Packard and Bayer.
Exel's sales last year rose 24 per cent, while Deutsche Post's increased seven per cent.
The German company has spent more than £3.7 billion on acquisitions since 1996, expanding in package delivery as well as shipping of industrial goods.
"Deutsche Post's strategy is to be the biggest,'' said David Greenall, a Dresdner Kleinwort Wasserstein analyst in London.
But opinion among other analysts differed.
"We believe the acquisition will become rather expensive. We assume Deutsche Post has to pay a significant premium," said Merck Finck analyst Robert Heberger.
Despite having £2.86 billion in cash and net debt of just £886 billion, Mr Heberger said a possible sale by Deutsche Post of new shares to investors could not be ruled out to help fund any deal.
The purchase would bring DHL greater scale and give it clear market leadership, Investec analyst John Lawson said.