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A source said the two contractors were in advanced talks with Amec, while a third private equity buyer was in the frame.

The construction and civil engineering business is likely to be bundled together with other elements of Amec鈥檚 built environment portfolio, including PPP and possibly regeneration, as construction has been a loss-making business. Amec鈥檚 building facilities business is also up for sale.

Amec announced that the sale was 鈥減rogressing well鈥� at its annual meeting this week and that it had reached the second stage of bidding. One City analyst said it was likely that a trade buyer would triumph.

An Amec spokesperson declined to comment on specific companies but said there was 鈥渁 mix of trade and private equity interest鈥�. He added that the sale of all parts of Amec鈥檚 built environment would be completed by the end of this year.

There has been a mix of trade and private equity interest

Amec spokesperson

Buying parts of Amec would fit in with Morgan Sindall and Balfour Beatty鈥檚 strategies of acquiring UK companies. Balfour Beatty bought Mansell and more recently Birse, and Morgan Sindall bought parts of Gleeson鈥檚 engineering business last year.

Samir Brikho, Amec鈥檚 chief executive, said in January that it intended to sell the built environment business to focus on the energy market.

Amec reported a pre-tax loss of 拢109m in its 2006 results after it was hit by a 拢90m writedown in the construction business. Turnover rose from 拢2.8bn to 拢3.2bn in 2005.

In the a statement this week Brikho said trading in the 鈥渃ore businesses鈥� was strong but that 鈥減erformance is expected to be tempered by the strength of sterling鈥�. He added: 鈥淎fter the programme of divestments Amec will be well positioned to take advantage of investment opportunities.鈥� A further update will be issued before Amec鈥檚 interim results on 6 September.