York Waterworks plc revealed today it is in takeover talks with a mystery predator.

Shares soared through the roof after the company - which supplies 11 million gallons of water daily to 175,000 customers across York - confirmed to the stock exchange that an approach had been made for it from an undisclosed party.

In a shock statement, it said: "Following an approach, preliminary discussions are currently taking place, which may or may not result in an offer being made for all of the issued share capital of the company."

The company, which has repeatedly won strong praise from the independent watchdog OFWAT for the high standard of its service to customers, added: "A further announcement will be made when appropriate."

The statement was prompted by a ten per cent rise in the price of shares yesterday - from 307.5 pence to 340 pence per share.

But within hours of the statement being issued, the price had shot up another 105 pence to 445 pence per share by midday.

The company's 80 staff were informed of the developments at briefings held at the treatment plant at Acomb Landing, just upstream of Clifton Bridge, and at the company's administrative HQ at Lendal Tower.

Staff were told that the company was seeking to safeguard their best interests during its talks.

But John Kirk, regional organiser of the GMB union which represents many staff, said the union would be concerned to ensure that existing terms and conditions were protected if the takeover goes ahead, and also that there were no redundancies. The identity of the interested party is not yet known, although there was speculation today that it is Yorkshire Water, which supplies a vast stretch of Yorkshire apart from an island of territory around York covered by the Waterworks. But a spokesman would only say: "We do not comment on rumour or speculation."

Another possible suitor is Anglian Water, which bought Hartlepool Water in July 1997. But a spokesman said: "It is not our policy to comment on speculation and conjecture on the stock market.".

Shares in both Anglia and Yorkshire Water both lifted slightly today amid the intense speculation.

Suez Lyonnaise des Eaux, which owns Northumbrian Water, this afternoon took itself out of the frame, saying: "It isn't us."

York Waterworks was floated on the stock exchange in 1995. Since then, with the opening up of the gas market to competition, it has launched subsidiary York Gas to sell gas, and this now has 20,000 domestic customers nationwide.

Today's York takeover speculation led to hikes in the value of shares in other water companies also considered ripe for takeover, with Cambridge Water shares jumping by seven per cent and Dee Valley spurting up by six per cent.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.