CARILLION CONFIRMED last month it was considering buying Mowlem in a deal to create Britain's third multibillion pound contractor.
Last year, Carillion generated a turnover of £1.99bn and Mowlem £2.1bn. The only two contractors generating more were Balfour Beatty with £4.2bn and Amec with £4.8bn.
Mowlem said a preliminary approach had been made to the company at the end of October, prompting speculation about the identity of the mystery bidder. A merger between the two contractors could eliminate cost duplications in sectors where they overlap, such as road, rail, health and PFI.
It would also enable Carillion to broaden into environmental work, and mechanical and electrical contracting through Mowlem's engineering and environmental services divisions. Both companies operate internationally, but in different countries.
Mowlem's share price rose after it decided to write off several contract losses over the past year. At the time of writing, shares were trading at 189p compared to 129p earlier this year.
Mowlem is also restructuring its construction services and has set up a new central risk management team to improve its risk assessments and strengthen bid review processes.