The Heckmondwike-based group has been in takeover talks with D&D since September, but said yesterday an asset sale would be its preferred route.

600 said discussions are on-going with D&D regarding a potential sale of selected assets which, if successful, is likely to need shareholder approval.

The group was unavailable for comment.

600 said that it is not in discussions with any other parties regarding a potential offer for the company and accordingly it is no longer in an offer period. The firm said a further announcement on the potential sale of assets to D&D will be made when appropriate.

600 recently returned to profit and said business confidence is slowly returning to its major markets as developed economies show a renewed interest in manufacturing and investment. The group reported a 940,000 pounds pre-tax profit in the six months to September 28, up from a 660,000 pounds loss the previous year.

The firm said it has increased its market share and made improvements in operational efficiency.

600’s revenue rose 5.2 per cent to 20.9m pounds.

600’s chairman Paul Dupee said: “With globally recognised brands and continued focus on developing our product range, we continue to look forward with optimism.”

He said the return to profit had been achieved despite reduced industry demand for machine tools in the first half of the year.

"We expect business confidence overall to improve in the second half,” he added.

600 designs and develops metal cutting machine tools sold under the brand names Colchester, Harrison and Clausing. It also designs and manufactures precision engineering components under the brand names Pratt Burnerd and Gamet.

The group said that revenue growth was driven by increased market share in Europe, where sales were up by more than 35 per cent on last year. This was despite overall market activity in euro zone countries being relatively weak compared with last year.

It added that demand in the UK improved steadily over the six months. Market conditions in North America in the first quarter were slower, but gathered momentum over the summer.

Overall revenues for North America fell around seven per cent. 600 said this fall was not as steep as the overall market decline, implying a gain in market share.

Demand in Australia was very subdued as a result of government austerity measures coupled with low levels of mining investment in the run-up to the recent elections.

Australian sales fell by more 
than 20 per cent, although 600 said the impact on profits was mitigated by tight control of overhead costs. Mr Dupee said the decision to downsize manufacturing operations into a reduced site footprint at Heckmondwike was completed in September.

As a result of this, the second half should benefit from improved operating efficiency and a reduction in overhead costs. The group said it recently regained exclusive rights to the distribution of Colchester branded products in Germany, the largest market in Europe.

Mr Dupee said this will provide opportunities to increase market share in Germany over the next few months.

The group said that recent industry forecasts indicate that outlook for the machine tool consumption worldwide is expected to show growth of 5.2 per cent in 2014, with the most significant contribution from the Americas – at 7.3 per cent.

This compares with the 2013 decline of 8.2 per cent worldwide and the 3.8 per cent fall in the Americas.