City talk links Glasgow-based Weir to £4bn bid for Swiss rival Sulzer

Shares in Sulzer rose by 3 per cent amid rumours that the FTSE100 company was lining up an approach for Sulzer in which Russian billionaire Viktor Vekselberg holds a 32 per cent stake through his holding company Renova. While some analysts doubted whether Weir would be behind such a bid, a potential tie-up between the two companies would create one of Europe's largest specialist engineering firms.

Panmure Gordon analyst Oliver Wynne-James said although the two groups would be a good fit, he believed Sulzer would probably be too big for Weir which has a market capitalisation of 3.6bn.

"We expect Weir to do a large deal and raise some money in the equity markets at some stage but I think the Sulzer market capitalisation, if you add a 20 per cent premium, is too large, and it might become contested," said Wynne-James, who doubted whether Weir was behind a planned approach.

Shares in Weir closed down 2.8 per cent, or 49p, at 1,690p. Its chief executive Keith Cochrane has made no secret of his ambitions to grow the business globally but although he has a war chest of around 500-600m at his disposal for acquisitions, a bid or merger deal with Sulzer - worth almost 3bn before any bid premium - would be on a different scale.

Ironically, Weir Group was strongly touted as a takeover target for Sulzer a decade ago but the Scottish company's strong growth in recent years has seen it overtake the Swiss firm's value.

Shares in Weir have more than doubled in the past 12 months and are up by over 300 per cent in the past three years, significantly increased its potential financial firepower to do bigger deals.

Sulzer was founded in 1834 in Winterthur, Switzerland, and employs 13,000 staff in more than 120 locations worldwide. Markets served include the oil and gas, hydrocarbon processing, power generation, pulp and paper, aviation and automotive industries.

In 2007 the company lost out in its 48m bid to buy Weir's pumps division.

Jim McColl's Clyde Blowers stepped in to buy the business after talks with Sulzer broke down.

Sulzer's UK interests include Sulzer Wood, an Aberdeenshire-based joint venture with Wood Group, which provides specialist engineering support services for pumps and gas compressors in the oil and gas, power generation and water industries.

Vekselberg, often considered to be one of the remaining Russian oligarchs with a personal wealth estimated at around 10bn, is currently overseeing a vast restructuring of his assets.

Neither company was prepared to comment.