Wates has held preliminary discussions with Shepherd Group over the possible acquisition of Shepherd’s contracting businesses.
A source who wished to remain anonymous said the firms were in the process of buying three Shepherd businesses – Shepherd Construction, Shepherd Engineering Services and Shepherd FM – with an announcement expected in “a couple of weeks”.
An insider confirmed to Construction News that there were “a lot of talks going on to see where opportunities lie”.
But the source added that, as yet, “nothing is official”.
Last year saw a series of senior exits from Shepherd Construction, including regional managing director Mark Tant, business director Peter Bates and head of procurement and design Andrew Wilson.
Former Shepherd Construction managing director Phil Greer also left the group late last year to join Laing O’Rourke as operations leader.
The news was followed by annual results for Shepherd Construction in which it posted an 8 per cent fall in its turnover for the year end 30 June 2014, in December.
Its revenue dropped to £686m for the year, compared with £748m for the same period the year before, with earnings falling to £10.1m from £10.2m in 2013.
Shepherd Group is split into four businesses: Shepherd Construction, SES, Shepherd FM and Shepherd Homes.
In November last year, Wates expanded its response maintenance business with the acquisition of £30m-turnover company, Purchase Group.
The firm provides responsive and planned maintenance services, as well as green technologies, to housing associations and local authority clients in the Midlands and Wales.
Earlier that year, Wates chief executive Andrew Davies told Construction News his focus was to grow the business as much as it could from its core market strengths, before looking to expand into new sectors, from civils to facilities management.
A spokeswoman from Wates Group said: “We don’t comment on speculation.
“As you would expect, we talk to people in the industry about different things all the time.”
A spokesman from Shepherd Group said: “It’s company policy not to comment on speculation and rumour.”