Under the proposed terms of the Bovis sale, P&O would receive up to pounds 350m in cash and a stake of up to 15 per cent in WS Atkins, becoming the single largest shareholder in the highly rated engineer.
However, the WS Atkins chief executive Mike Jeffries said that leaving such a large holding in the hands of P&O could increase volatility in the share price.
"The disadvantage is that this is quite a big block of shares in the hand of one shareholder with other interests. So if there was a downturn P&O might want to offload it," he said. He added that a sale of the stake would push down WS Atkins' share price, which has almost trebled in value since the 1996 flotation.
However, Mr Jeffries acknowledged that the presence of P&O would bolster confidence in the future of Bovis, a respected construction business with sales of over pounds 2bn a year.
WS Atkins yesterday reported an 18 per cent rise in interim pre-tax profit to pounds 15m on turnover up 15 per cent to pounds 200.9m.