Private equity boss Guy Hands and French industrial group Suez were today being linked to a possible counter offer for waste disposal group Biffa.
Earlier this month, Biffa's board supported a 350p a share, £1.2 billion takeover proposal from a private equity consortium led by Montagu Funds.
But the Daily Telegraph said Mr Hands' firm Terra Firma was in advanced talks with Suez to form a consortium planning a rival bid for Biffa.
Biffa shares opened 2% higher at 371.5p following the latest speculation. It is thought that if Suez decides to press ahead it will table its bid at between 380p and 390p a share - the equivalent of up to £1.5 billion.
Despite recommending the Montagu offer earlier this month, Biffa said at the time it had been contacted by other parties interested in submitting offers.
Terra Firma and Suez have both been in a data room carrying out due diligence on Biffa, the Telegraph report said.
Suez is likely to be interested in acquiring Biffa's existing waste collection, treatment and recycling operation, in a move that would combine the division with its own waste management group Sita.
Terra Firma is believed to be interested in acquiring Biffa to get hold of its landfill gas sites for its renewable energy business Infinis.
Biffa, which was spun off from Severn Trent in 2006, collects more than four million tonnes of waste a year from around 75,000 industrial and commercial customers and over one million households.
Waste companies are seen as attractive targets because they benefit from long-term visibility on contracts, as well as from a bottle-neck on environmental projects as the UK attempts to meet EU landfill targets.
The business has launched national paper, card and glass collections and recycling services for its industrial and commercial customers, and is offering a treatment service to firms who do not want to pre-sort their own rubbish to meet the rules.
The regulations are designed to reduce the amount of non-hazardous waste sent to landfill sites. Buckinghamshire-based Biffa. which has 42 treatment and recycling centres and 33 landfill sites, reported operating profits of £90.7 million in the year to March 30. Revenues were £742.7 million.
Montagu knows the sector well as it formerly owned Cory Environmental, a rival business with a number of landfill sites and local authority contracts.
It is working on its bid with Global Infrastructure Partners, a fund previously involved in the 2006 takeover of London City Airport.