Housebuilder Country & Metropolitan is considering mounting an audacious bid for Tay Homes, a rival twice its size.
Country & Metropolitan, which floated last year, has a market value of £13m.

Tay's value is about £24m but it has become vulnerable to a takeover as a result of falling profit and its low share price.

Country & Metropolitan last week announced it had bought 1.5 million shares in the Yorkshire-based firm, taking its stake to 4.13 million shares, or 15%.

Tay told its shareholders this week that as there was no "sensible, fundable" offer from Country & Metropolitan, their interests would be best served by sticking with Tay.

But a City source claimed Country & Metropolitan was poised to swoop for Tay's remaining shares.

He said: "Country & Metropolitan is looking to acquire more shares. It wouldn't make sense to come this far and only take another 10%. A takeover offer is on the cards."