The Enquirer understands that preliminary talks have been held about Wates acquiring Shepherd Construction, Shepherd Engineering Services and Shepherd FM.
Sources close to the talks said discussions between the two privately-owned firms have been on-going since the start of the year.
The move follows a string of senior departures at Shepherd as the construction division was restructured in the wake of disappointing results.
The latest raft of bosses left in January following the initial restructure in September overseen by chief executive Mark Perkins.
The Enquirer understands that Shepherd Engineering Services managing director Peter Lewis suddenly left the company last month “to pursue other opportunities”.
A company source described Lewis as “an inspirational leader” and “the person ultimately responsible for building SES into the success it is today.”
The source added: “Morale here is at an all time low with everyone left in the dark.
“We just want to know what is going on here at Shepherd.”
Wates declined to comment while Shepherd said “as a matter of company policy we never comment on rumours or speculation”
How they shape up
|Wates Group||Shepherd Group|
According to Enquirer sources the profitable Portakabin business would stay with the family-owned Shepherd group along with several other operating firms.
The main prize for Wates is the contracting businesses which have experienced mixed trading recently.
Latest accounts for Shepherd Construction reveal it ran up an £8.2m loss last year on turnover down a third to £240m. Shepherd Engineering Services did better making a £5.3m profit from turnover up 8% at £208m.
These two main Shepherd contracting arms employed nearly 1,400 staff.
Despite both operating nationally the construction business provide a good geographical fit with Shepherd strong in the north from its historical base in York and Wates established in the south from Leatherhead in Surrey.
Wates has also long held ambitions to develop its strength in building services to provide a more vertically integrated offering to clients.