Galliford Try demonstrated its appetite for growth this week as it announced that it was in talks to buy southern housebuilder Linden Homes for about 拢200m.

This move, which follows the installation of Greg Fitzgerald as Galliford鈥檚 chief executive, comes a year after it swallowed Chartdale Homes for 拢67m.

The acquisition of Linden would once again double the size of Galliford鈥檚 housing business.

Linden鈥檚 last recorded landbank stood at 4,622 plots, compared with Galliford鈥檚 4,818. In 2005 Linden made a 拢12.8m profit in on a turnover of 拢280m.

After a management buyout in 2002, 65% of Linden is owned by its management, and 35% by HBOS which backed the deal. Philip Davies, Linden鈥檚 founder, is likely to make 拢20m from a deal.

Galliford had an enterprise value of 拢95m a few years ago and now it is worth 拢200m

David Taylor, Analyst

Galliford has a construction and a housing business, and has shown no indication of changing that model. Last year it bought Morrison to expand its construction work.

David Taylor, an analyst at stockbroker Teather & Greenwood, said: 鈥淚t鈥檚 a model that can work well. Kier is the classic example. Contracts are cash generative and housebuilding has higher margins. Galliford had an enterprise value of 拢95m a few years ago and now it is worth about 拢200m.鈥�

A joint statement from the companies on Monday said only: 鈥淭he boards of Galliford Try and Linden announce that they are in exclusive discussions, which may or may not lead to Galliford Try making an offer to acquire the entire share capital of Linden.鈥�

Neither company would comment further.