Towergate has moved to quash speculation that it is about to enter a bidding war with AXA for regional broking giant Smart & Cook.

Speculation reached fever pitch this week that the Harrogate-based broking group would be at the centre of a tussle between AXA and Towergate over control of commercial lines distribution in the UK. The broker is rumoured to be worth above £120m.

AXA, which recently emerged as a broker consolidator with its twin purchase of Stuart Alexander and Layton Blackham, is thought to have drawn up a list of at least 15 brokers which it is looking to approach. Smart & Cook is seen as the jewel in the crown.

"AXA isn't going to buy all the brokers on its list, but it will want to open up discussions," a source said. "Smart & Cook is supposedly at the top of that list."

Another added: "Towergate has been interested in Smart & Cook for years and, if it is interested, AXA certainly would be. [AXA] will want to push up the price to force Towergate to back out of the sale."

But Andy Homer, chief executive of Towergate Partnership, insisted the group was not looking to buy Smart & Cook. "I can absolutely categorically say that no discussions have taken place between Towergate [and Smart & Cook]."

Smart & Cook's future has been the subject of much debate in recent months. As an independent broker its sale will depend on its major shareholders, primarily 3i and the family of its deceased owner, Geoff Cook.

A senior source indicated that 3i could be looking to offload its shareholding soon: "3i is seriously considering being a consolidatee rather than consolidator."

Speaking to Insurance Times last year, Smart & Cook chief executive Paul Meehan said: "3i is investing in our business for a few years but it has an eye on an exit. The time to exit is when the market hardens, so we are looking 2008/2009.

"I think 3i will be keen to realise its investment at that point in the cycle and that comes every six years."

AXA and Smart & Cook declined to comment.