At the firm's AGM this week, when it revealed disappointing first-quarter results, Quebecor World chief executive Pierre Karl Pladeau insisted that the firm was "committed to the UK", and indicated that he expected Polestar to come up for sale in the coming years.

"Our competitor is owned by an investment firm that is unlikely to be in the print market five years from now," he said.

Polestar chief executive Barry Hibbert said: "All the large printers including Polestar continue to evaluate their market position, but there is nothing firm on the table from anyone. It's too early for Polestar in its current investment cycle."

One analyst agreed, saying: "It would make sense, but Quebecor would want to see that Sheffield was making money before they made a bid."

Another revealed: "The two companies have got well down this route before, in 2002, but it broke down over price."

According to European Rotogravure Association figures, the deal would create a firm handling 20% of Europe's gravure capacity, making it a major rival to the 25% capacity held by the Bertelsmann/Axel Springer gravure joint venture.

The firm blamed strikes in France and the problems at Corby for the poor European performance in the first three months of the year.

Despite revenue growth for the period from 167m ($315m) to 176m ($332m) year-on-year, operating income and operating margins halved to $6m and 1.9% respectively.

Speaking at the firm's AGM on Tuesday afternoon, Pladeau said: "The momentum generated in 2004 was not translated to the first quarter of 2005."

Story by Josh Brooks