THE battle for control of Mersey Docks and Harbour Company, the owner of Sheerness Docks, is hotting up after a potential bidder raised its stake.

In the past few days, Peel Holdings, the owners of Manchester Ship Canal, Liverpool John Lennon Airport and the Trafford Centre in Manchester, increased its stake to just over 25 per cent by investing a reported £103.8m.

The deal means that Peel Holdings may now be strong enough to block an attempt by private equity firm CVC Capital to gain control.

CVC Capital, a private investment group that buys up companies, has been in talks with Mersey Docks for several months. It is thought to be willing to pay more than £722m for Mersey Docks, which owns Liverpool and Heysham in the north and Sheerness and Chatham in the South East.

Apart from its ports on the Medway and Mersey rivers, the company also operates four marine terminals in the UK, and two container shipping lines.

Mersey Docks is a successful group with strong cash flow. The port of Liverpool in particular has shown huge growth. Last year, turnover reached £528.7m, up by a fifth on the previous year.

Half-year turnover in 2004 rose nearly six per cent to £151.5m, with pre-tax profits up to £28m. It employs more than 1,100 people. This strength has made it a prime takeover target.

Shares in Mersey Docks rose by 50p to a record £10 after Peel increased its stake and fuelled talk of a counter-bid to CVC.

Peel Holdings has assets valued at more than £2bn and operates four divisions - The Trafford Centre, Land and Property, Ports and Airports.

It operates the ports of Clydeport and the Manchester Ship Canal, and airports at Liverpool, Durham Tees Valley, Robin Hood Doncaster Sheffield, and Sheffield City.

The company was founded in 1920 as a textile spinning business in Bury, Lancashire. The Whittaker family took a controlling interest in 1973 and by 1977 had moved the business into property.

In 1987, it bought the Manchester Ship Canal and in 1996, developed the Trafford Centre, a 1.4m sq ft shopping and leisure complex with 280 shops, 35 restaurants and 20-screen cinema.