Housebuilder Persimmon is understood to be considering a rights issue to raise £1bn for a takeover of Taylor Woodrow.
It is understood that Persimmon has not yet decided whether to make a bid.
Persimmon is the UK’s largest housebuilder, but will lose this status when Barratt’s £2.2bn acquisition of Wilson Bowden is completed. The proposed Taylor Wimpey would overtake both.
If the Taylor Wimpey deal goes ahead it will make 36-year-old Peter Redfern, the Wimpey boss, one of the youngest chief executives in the FTSE 100.