UK board of French giant said to be pushing to buy ailing contractor; other large firms also interested

French contractor Vinci is eyeing up Mowlem as a takeover target.

It is understood that Vinci鈥檚 UK directors are keen to buy Mowlem but the idea has been rejected by the French board, led by chairman Philippe Ratynski. A spokesperson for Vinci said it was not looking at the company.

However, a senior source at the company said the UK board would revisit the issues early next year, once its French counterpart had completed other deals and Mowlem鈥檚 share price had had the chance to fall.

Last Monday shares in Mowlem rose 5% to 170p when broker Cantor Fitzgerald raised its stake in the company to 6.5% on behalf of a mystery client, fuelling takeover talk in the City.

On Tuesday this week, Mowlem told the stock exchange that hedge fund Man Financial had also taken a 3.23% stake in the company.

As Europe鈥檚 biggest contractor, Vinci has the firepower to acquire Mowlem. At the end of 2004, it had a net cash reserve of *1.5bn (拢1bn) and made a *349m operating profit on an *8.3bn turnover. It employs more than 45,000 people.

It is likely that Vinci would sell or close down parts of the business that are not core, including the cleaning business Pall Mall.

Vinci鈥檚 UK presence presently takes the form of Watford-based contractor Norwest Holst Construction. This has five divisions, in building, civil engineering, utilities, environment and soil engineering.

In February, Norwest Holst bought four live PFI education projects from Jarvis in Lancaster, Nottingham, Croydon in south London and Rhondda in south Wales.

Mowlem, which last year reported a 拢2bn turnover, would be attractive to a big player that is not averse to taking a risk and that is prepared to close some of the business.

After a series of profit warnings, Mowlem last month announced a pre-tax loss of 拢73m for the six months to 30 June. The losses were concentrated in the construction division. The company has a pension deficit of 拢106m.

City sources this week said that German contractors Hochtief and Bilfinger might also be interested in buying Mowlem. Both are thought to be looking for inroads into the UK PFI market, where Mowlem has an established presence.

Laing O鈥橰ourke might find the deal tempting as it could provide the opportunity for a straightforward flotation. Balfour Beatty, the UK鈥檚 largest contractor, would also have the funds.

Mowlem鈥檚 share price was 165.5p as 好色先生TV went to press.