Skanska may not increase Costain stake

Speculation is growing that Skanska will not increase its stake in troubled Costain despite the Swedish giant's ability to take a controlling increase with "little more than small change".

A leading City analyst said Skanska is "not going to make a bid, it is more interested in the USA and mainstream Europe."

Skanska has been shedding its non-core businesses and is interested in selling its stake in Skancem, which owns Castle Cement. The firm wants to expand its North American operation.

The City source said that "Costain doesn't fit that scenario," but Bovis with its extensive US activities "would fit the bill."

Skanska is also being linked with Germany's largest contractor Holzmann, which also has USinterests.