THE race for Scottish and Newcastle's £2.3bn managed house business has taken a new twist with reports that two competitors plan to team up.

The billionaire Reuben brothers are believed to be considering a joint bid with Laurel Pub Company to take over the 1,400-strong division.

That would leave Hartlepool tenanted house group Pubmaster with an uphill climb to persuade S&N to help it become the second biggest pub chain in the UK.

Pubmaster was understood to have tabled the highest bidso far, in the region of £2.5bn, until the Reubens became involved.

A combination of their buying power and Laurel's expertise could be attractive to S&N.

The Reubens are believed to have been searching for a sizeable acquisition in the UK in recent months - they were linked to the battle for supermarket chain Safeways and Six Continents hotels and pubs. Despite this, Pubmaster is still likely to have a good chance of boosting its current 3,400 houses as it has more than proved its ability to deal with major acquisitions in recent years.

It will hope to put behind it recent speculation that its ownership was in jeopardy following reports that major stakeholder and Middle-Eastern property mogul Robert Tchenguiz was planning to buy the private company.

Mr Tchenguiz scotched rumours that he was in talks with German bank WestLB with a view to acquiring its 21 per cent stake in Pubmaster, a move which would give him 58 per cent of the group.

The company has a system in place which compels any shareholder planning to sell their stake to inform fellow owners in the business first.