THE UK contract hire market is bracing itself for a massive shake-up as takeover fever grips the industry. The prospect of a leasing superleague of around half a dozen companies has re-emerged with major players looking to snap up smaller rivals as declining residual values reduce acquisition costs.

An announcement that a large leasing company is set to acquire Northampton-based Alexanders Contract Rentals is expected. City rumours, meanwhile, centre around both the long-awaited entry of the Halifax into the contract hire market, and the short-list of buyers for up-for-sale Arriva Automotive Solutions. With Birmingham-based Autolease also a takeover target there are growing signs that the industry is polarising into a top tier of powerful operators, following the recent acquisition of Motorent by ACL and Abbey National's expansion plans for its subsidiary First National Vehicle Holdings, which recently bought Fleet Management Services.

The demutualised Halifax is now the only major British bank not to have a dedicated fleet funding operation. Its name has been linked with both Arriva Automotive Solutions, which supplies Halifax with its company cars, and with Autolease, although a spokesman for the Halifax refused to comment. Arriva has acknowledged that it is in discussions with at least 10 companies, including major financial institutions, and feverish industry speculation suggests the principal names in the frame are Halifax, GE Capital Fleet Services and Lease Plan's parent ABN AMRO, although the prospect has not been ruled out of a complete takeover of Arriva plc followed by the break-up of its three constituent parts. Standard Chartered, owner of ACL, is also rumoured to be back on the acquisition trail and is being linked to Autolease.