Dixon Motors has confirmed that it is in talks with an unnamed company about a possible takeover. The company made the announcement after its shares rose steadily last week.

In a statement, Dixon said it would issue further details in due course. It advised shareholders to take no action at this time.

Shares leapt 14% on the news to 240p, valuing the firm around £84m.

Dixon posted a 55% increase in pre-tax profits for 2001 to £12.1m on turnover of £817.3m. The group, which has 67 car dealerships mostly based in the North-east and a national chain of motorcycle outlets, would be a highly attractive acquisition for a number of competitors.