Pavilion Insurance Network is in talks with a potential bidder, it emerged this week.
The niche insurance specialist, which has seen its share prices shoot up from just below 5.50p in December to 10.40p last week, revealed that "talks have been progressing satisfactorily over the past month, with the potential of an offer being made at a modest premium over the current bid price [which last week stood at 9.75p]".
A formal offer is yet to be made, and the company's spokesman could not give further details of the bid.
He said: "the company is only in talks. At this stage, we are not able to comment further."
Hiscox and Primary Group – the latter underwriting Pavilion's products – could be potential bidders.
But Hiscox, which bought 13.45% of Pavilion's shares last September, said it "cannot comment on market speculation".
Hiscox saw its UK profit go down to £31.9 million, from £40.4 million in 2005, and said it will continue to expand the business.
Early this year Pavilion announced annual sales growth of 46% in 2006, compared to the same period in 2005.
The insurer is expected to announce its preliminary results for the year ended 31 December 2006 in early April.
Pavilion has 50,728,630 shares issued and, if current prices remain, the mystery bidder could pay around £5m for the company, at 9.75p per share.
