Talks are at an early stage but both sides have confirmed discussions are taking place
Kier said: “Kier Group can confirm that early discussions have taken place with the Stewart Milne Group concerning the possible acquisition of some of the activities of their construction division whose geographical spread, well-established reputation and customer base could provide a good fit with Kier’s own construction business.
“However, at this stage there can be no certainty that a transaction will take place.”
A statement from Stewart Milne Group said: “We are carefully considering this and will be undertaking a period of due diligence.
“This is due to begin in the next week and is targeted to be completed by the end of March. We cannot provide any further information.
“Should this go ahead it would allow the Stewart Milne Group to focus on expanding and developing its successful house building and timber frame operations across the UK.”
Milne said it was approached by the national contractor although both parties said the deal is still in its early stages.
Turnover at Milne’s construction division grew to £30.1m from £22.3m in the year to June 2011 from a group turnover of £239.4m.
The firm made 40 people redundant at its timber systems division late last year.