SHARES in Eldridge Pope soared after the pubs chain confirmed it was negotiating a possible takeover.

The Dorchester-based pubs operator saw its share price leap ten per cent after formally announcing it was in talks with entrepreneur Michael Cannon.

Former Weymouth pubs supremo Mr Cannon already owns 22 per cent of EP after purchasing an extra 1.57 million shares at a cost of nearly £2.5 million.

Mr Cannon, through his company SDA, now owns 5.5 million shares in EP. Analysts believe an offer of £47 million for the firm could tempt investors to sell.

The confirmation means months of speculation over the future of the company could soon be over.

Mr Cannon, who was previously involved in Weymouth-based pubs group Devenish, has been steadily increasing his stake in EP over the last year. Shares rose yesterday 15.5p to 168.5p.

EP no longer brews beer but runs such pubs chains as the Toad. The company sold its Weymouth Avenue site in Dorchester but continues to rent offices for its headquarters there.

Analysts said the pubs operator was vulnerable to a takeover after failing to halt a drop in sales - EP reported a half-year loss of £909,000 in May.

David Evans, senior director at Dorchester-based Brewin Dolphin, said: "Mr Cannon has been steadily increasing his interest in Eldridge Pope.

"There has been speculation over the future of EP for the last 18 months but this significant announcement means that could soon be over."