Carillion shares performed strongly yesterday following speculation that the Wolverhampton-based construction and support services group was looking to buy troubled rival Mowlem.
Analysts said a link up would strengthen Carillion's private finance initiative (PFI) business and after an initial 11/2p dip, buyers drove the stock 9p, or three per cent, higher at 285 at market close.
Mowlem, which is thought to be looking for bids in the order of 225p per share, which would value the business at about £320 million closed 51/2p higher at 188p.
Mowlem shares have put on a spurt on the back of takeover talk following a turbulent year during which it issued four profit warnings and suspended its dividend.
Reports said Carillion would have no problem in raising the cash for a bid, but would have a hard time persuading shareholders that swallowing Mowlem would not mean nasty surprises. Neither firm would comment.