The two companies have confirmed that talks are taking place and that a deal could be completed by as soon as the end of this month.
Stewart Milne Group told The Herald newspaper that it had been approached by Kier. It said: "We are carefully considering this and will be undertaking a period of due diligence. This is due to begin in the next week and is targeted to be completed by the end of March. We cannot provide any further information.
"Should this go ahead it would allow the Stewart Milne Group to focus on expanding and developing its successful house building and timber frame operations across the UK."
Kier told the paper: "Kier Group can confirm that early discussions have taken place with the Stewart Milne Group concerning the possible acquisition of some of the activities of their construction division whose geographical spread, well-established reputation and customer base could provide a good fit with Kier's own construction business. However, at this stage there can be no certainty that a transaction will take place."
Stewart Milne’s contracting arm had a turnover of £57m in the year to 30 June 2011, out of total group revenue of £229m.
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