Bob and Thomas couple up

Bob The Builder is fixing it to join forces with Thomas the Tank Engine after it emerged that their respective parents are back in merger talks.

A takeover of Gullane, the company behind Thomas, by HIT Entertainment, the owner of Bob, would create one of the biggest producers of children's television outside the US, with a stock market valuation of around £600m. It would see HIT's other characters such as Barney the Dinosaur, Pingu the Penguin and Angelina Ballerina link up with Gullane's Sooty, Captain Pugwash and Fireman Sam.

A source close to Gullane said there had been some "preliminary discussions" between the two groups. Gullane, which rejected a takeover bid from HIT in 2000 that would have valued it at up to £300m, is expected to confirm today that it has received an approach.

Since turning down HIT's initial bid, Gullane's shares have more than halved, valuing the group at around £116m.

HIT, which has grown Bob the Builder into a worldwide phenomenon screening his adventures in 130 countries, saw its status as a media group take off when it acquired Barney's US-based owner Lyrick Corporation last year for £190m.

HIT's cheery cartoon construction worker emerged as a surprise hero in the aftermath of 11 September and sales of Bob rocketed as parents and children associated him with construction workers at Ground Zero. As a larger group, HIT would be in a much stronger position to expand in the US.

HIT, which is often linked with The Muppets because its founder, Peter Orton, used to work for their creator, Jim Henson, said in March that it wanted to acquire more characters.

A merger would leave two other quoted companies handling the rights to children's characters in the UK. They are Chorion, which owns Noddy, and the smaller Entertainment Rights, whose characters include Basil Brush.