Support services group Capita (LON:CPI) and private equity firm Apollo are squaring up in a takeover battle for back office services supplier Xchanging (LON:XCH).
Capita made a 145p per share cash offer for Xchanging in August and has since increased it three times, resulting in a revised offer of 160p per share.
Meanwhile, Apollo has offered 170p per share, prompting Xchanging to allow both companies to look at its books.
Xchanging said there was no certainty of an offer and told its shareholders to keep their shares and to sit tight.
The group said it was trading in line with statements released at the end of July, when it said: "BPS and technology businesses have performed strongly in the first half of the year and the outlook is for this robust performance to continue in the second half of the year, although this depends on the timing of material Xuber contracts, and currency effects.
"In procurement, we have a clear strategic objective to address the profitability issues in the second half of the year. The outlook for the full year is a trading performance in line with last year and a return to growth in the full year 2016."
It said it was still in positive talks about a number of multi-year and material Xuber contracts and would update the market when appropriate.
Capita said it believed a deal would help it to develop its existing operations, move into new markets and improve growth prospects.
It expects to be able to save at least £35mln from combining the pair's head office, shared services and IT operations.
It said it would fund any firm offer, which would be final unless a rival bidder confirms an alternative proposal, from a placing of new Capita shares.