Allen sells house building division

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The Independent Online

Allen sparked fresh speculation yesterday that it is about to make a bid for one of its smaller rivals as shares in the building and engineering group gained 8.5p to 246p.

Allen sparked fresh speculation yesterday that it is about to make a bid for one of its smaller rivals as shares in the building and engineering group gained 8.5p to 246p.

The upturn in the share price followed an announcement by Allen that it will net £23.8m from the sale of its housebuilding division to the privately owned builder Morris.

It is widely believed that Allen will use the money to fund acquisitions. Brandon, the Bristol-based tool hire group, has been named as the most likely target. Steve Charnock, an analyst at Charterhouse Securities, said: "I don't believe Allen will stay in its current form for long and there is a certain logic to a purchase of Brandon. Allen said it wants to concentrate on its plant hire business and that is what Brandon does."

Neil O'Brien, Allen group finance director, confirmed that the group is looking at acquisitions in its hire division, but said: "We will only buy if the price is right, if not we will not hesitate to return the money to shareholders." Mr Charnock said Allen, which was first reported to be looking at Brandon last month, could afford Brandon's £22m price tag.

Allen dismissed rumours that it has itself been approached with a takeover bid from Peterhouse Group, the construction and environmental services specialist.

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