KIER Group, the Bedfordshire-based construction company, last night confirmed it has been in talks with Barr Holdings about a potential GBP25m takeover of the Ayr-based contractor.

John Dodds, chief executive of Kier, told The Herald: "We certainly have been in discussions with Barr, and I can't really say any more than that because I don't know . . . I know where we are, but I don't know where they are."

Asked whether Kier had laid its cards on the negotiating table, Dodds quipped: "They (Barr) are looking at them."

The Herald revealed in November that Barr Holdings had been put up for sale - two years after new management was parachuted in to turn around the construction-towaste management combine.

At that stage, a source said the business was being marketed with a GBP25m price tag by accountants who were hoping to drum up interest across the UK.

Then in February, The Herald revealed that Kier was in pole position to acquire Barr - which has built more than 100 Tesco stores and 33 football stadia including Celtic Park - after Kier officials had been in at the group to conduct "due diligence" with a view to finalising a deal.

Dodds's comments yesterday suggest Kier remains keen to do a deal, but that the ball is now firmly in Barr's court.

A spokesman for Barr declined to comment last night, but did not deny Kier had been in for talks.

Stock market-listed Kier is thought to have proved an attractive suitor because, unlike some others, it was interested in acquiring the entire Barr Holdings business, from construction to aggregates, rather than just being interested in specific sites or contracts.

Bill Barr started the business in 1969, and with his two younger brothers still holds 66per cent of the shares, which would be worth some GBP16.5m if the business were sold for GBP25m.

Barr, 66, is a former chairman of Ayr United, and held this position in 2002 when the club made its only major cup final appearance since being founded in 1910 in the CIS Cup against Rangers.

Out of a total 880 Barr employees, 90 work in management and administration in Cumnock, Ayrshire and Paisley, Renfrewshire, and there has been speculation that some posts could be lost in these central functions if the company were acquired by a big English player.

Closure or dramatic shrinkage of these centres would be a bitter blow to staff members, who had to endure a long period of uncertainty when the firm ran into tough trading conditions around the turn of the millennium.

These were followed by the appointment of a management team in 2003 led by Tony Rush, who blamed the company's problems on diversification into activities such as running an ice rink.

Rush, a construction veteran, would also stand to receive a multi-million-pound pay-out for his significant shareholding.

If the company were sold for GBP25m, Royal Bank of Scotland would get around GBP7m for its 27per cent holding in the firm, which one source has said it had acquired at no cost.

In 2004, a recovering Barr made pre-tax profits of GBP3.8m, compared with an GBP8.4m loss previously.

Additionally, Kier yesterday posted a 20per cent rise in underlying first-half profit to GBP28.4m and hailed positive performances in all five of its business units.