A COMPANY that was started more than 20 years ago from its founder's North-East home last night confirmed a takeover bid believed to value it at £800m.

Northgate plc, now a Europe-wide company expected to turn over £500m next year, did not name its suitor or confirm the price under discussion.

But analysts believe it could be the subject of a takeover bid by its main UK rival, GE Capital, a global company that owns the second-largest van hire business in the country.

The Guardian newspaper reported rumours of a bid pitched at about 1,250p a share - valuing the company at £802m.

Northgate, formerly Noble Self Drive, started as an operation from its founder Alan Noble's home, in Hurworth, near Darlington.

It is now the market leader in the UK and Spain, with 2,000 employees, including 350 in the North-East at its head office in Darlington and operations in Teesside and Tyneside.

Anthony Platts, of Tees Valley investment manager Wise Speke, said: "The speculation is that the company to make the offer is GE Capital, based on their history of acquiring similar businesses. Northgate is number one in the van hire market, GE Capital is number two.

"GE has built up its business through acquisitions like this. In 1997, it bought Smith Hire and then TLS Commercial Vehicles.

"Whenever there is speculation about a bid for Northgate, GE Capital's name is always the name being bandied around.

"GE has a history of acquiring good businesses."

The key directors of Northgate hold significant stakes in the business and will receive massive windfalls if the bid is accepted.

Mr Platts said: "They face the decision: do I become an instant multi-millionaire, or do I carry on running this business?"

Northgate has seen massive growth over the past few years, with two acquisitions in a relatively untapped Spanish market, and an increase in the UK fleet by 11 per cent to 52,600 vehicles.

In four years it has almost doubled the number of UK and Ireland locations to 80.

Mr Platts added: "It has been an exciting growth story over the last few years, making inroads in Spain, and I think it is this that has caught the eye of a bidder."

Northgate shares soared to a high yesterday on the back of the announcement, up almost 20 per cent, or 211.5p to 1231.5p.