UK contractor Kier Group is in early discussions with Scottish property developer Stewart Milne over the possible acquisition of its construction division.
Kier said the geographical spread and customer base of the business would provide a good fit with its own construction business.
"However, at this stage there can be no certainty that a transaction will take place," Kier added.
Stewart Milne Construction reported revenues of £30.1 million (€36 million) for the 12 months to June, 2011.
Stewart Milne said due diligence would be completed by the end of March.
"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, in line with our longer term growth plans," the company said.