THE MOST surprising aspect of Mowlem's profit warning last week was not so much the departure of the finance director that accompanied it but the speed with which the group's share price rebounded.
When the company unveiled the catalogue of 'historic accounting issues' (see News) responsible for what will be a pre-interest loss of £7.5 million, its share price initially crashed from 217p to 185p before swiftly recovering to 206p. By the early part of this week it was back up at 212p.
Its resilience was partly due to City hopes that the new chief executive, Simon Vivian, can sort out the mess at Mowlem but also to a consensus that quoted contractors showing signs of weakness, particularly if they have PFI operations, will eventually attract bid interest.
Continental contractors which face the prospect of PFI being introduced in their home markets and which could benefit from the UK groups' know-how are seen as the most likely potential bidders.
Indeed, in common with most of the FTSE 250, the construction sector is now being scoured for potential takeover candidates.
Among house builders, Westbury and Crest Nicholson continue to be viewed as potential targets and the recent tussle over control of Countryside Properties has persuaded the City that, however grim trading becomes, bid interest will provide a floor for share prices in the sector.
Over the past month house builders' shares have risen by 5.4 per cent while the FTSE All Share has risen by 2.4 per cent.
Bid talk is also affecting building materials shares.Since RMC agreed to a bid from Cemex in September, Aggregate Industries has succumbed to a bid and Hanson - the only remaining major UK aggregates group - has seen its share price rise from 390p to 521p.
Meanwhile, shares in Marshalls, which recently sold its clay products division to Hanson, have risen by 29 per cent since early September, while shares in SIG have also been in demand.