Homeserve is preparing to ramp up its position in the home emergency cover market after opening talks with Domestic and General (D&G) over a potential buy-out.

The emergency services provider admitted it had approached its smaller rival, with a view to entering discussions over an offer.

According to analysts this could be worth in excess of £500m.

The move is intended to bolster the company’s current product offering, which includes home emergency cover for household disasters, with particular focus on D&G’s household appliance warranty business.

Homeserve currently has a small business that provides such cover, but D&G’s ability to offer extended warranty on a variety of household appliances including boilers, showers and white goods, is understood to have sparked the takeover approach.

The company said: “The Homeserve Board believes that a combination of Homeserve and D&G would help accelerate Homeserve’s strategy of providing total home emergency cover.”

D&G confirmed it had received an approach from Homeserve in relation to entering into discussions but said there was no certainty that the approach or any discussions would lead to an offer.

If a deal is agreed, Home-serve said it intended to transfer the underwriting risk to an insurance partner, in line with its current business model, where it works with the likes of AXA.

The preliminary takeover talks come after Homeserve announced a 30% rise in profits up to £70m with annual turnover of £477m.