News of a potential management buyout at Palmer & Harvey McLane has led to rumours that the wholesaler could be up for sale.

P&H said this week it was in talks that could lead to a "possible" MBO. However, according to an industry source, they had been ongoing for some time and could have stalled over price, potentially paving the way for outside bidders.

Because of the current economic climate the management was understood to be after a lower price, he said. However, shareholders were continuing to hold out for the best possible deal.

P&H said the possible buyout, led by CEO Chris Etherington, would involve "an offer being made for the entire issued ordinary share capital of P&H so the transaction would be governed by the Takeover Code".

However, making a public announcement on the MBO could be a subtle way of letting interested parties know the business was up for sale, said one City analyst. "P&H's announcement could flush out some potential bidders," he said.

P&H changed hands in a £172m MBO in 2002 but likely bidders this time around could include logistics companies because of the natural fit with P&H's operations as a delivered wholesaler. In September last year distribution company Bibby Line Group acquired a controlling 51% stake in Costcutter.

However, one corporate financier said a sale to an outside buyer was unlikely in the current climate. "I am not aware that the business is being touted around, but I would be very surprised if this was the way they would go about a sale," he said.

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