VAN hire group Northgate said yesterday that takeover talks were continuing with an unnamed party.

But at Darlington-based Northgate's annual meeting, chairman Martin Ballinger would only say: "Northgate continues to be in discussions with regard to an offer for the group. There can be no certainty that any offer will be forthcoming."

The company confirmed last month that it was in talks with a mystery suitor. It is believed an offer could be made for more than £800m.

Speculation is rife that the bidder is financier Guy Hands with his investment company Terra Firma.

But analysts believe an offer of £800m would undervalue the company, which is the market leader in the UK and Spain.

Northgate said yesterday that the group had seen weakness in its UK market in the first four months.

Mr Ballinger told shareholders: "Fleet growth has not been at planned levels and hire rates have weakened slightly as a result of competitive pressure."

But he said Northgate was expecting a satisfactory outcome for the year as a whole.