IMI, the engineering group, is close to selling its Polypipe building supplies business to an American private equity firm for about £300 million, The Times has learnt.

Polypipe entered exclusive takeover discussions with Castle Harlan last week.

The unit, which sells plastic pipes to builders merchants, as well as Oasis garden furniture, Pagette bathroom accessories, such as mirrors, and Celmac toilet seats, made a profit of about £28 million in 2004 on sales of £380 million.

Polypipe was put on the market in March after approaches from several unnamed suitors. Citigroup, the bank that is handling the auction for IMI, whittled down the list of original bidders to Castle Harlan and Electra Partners Europe in June, before narrowing the field down to one last week.

Electra is thought to be waiting in the wings if the talks between IMI and Castle Harlan stall.

Castle Harlan, based in New York, manages an investment fund of about $1 billion (£568 million). It was set up in 1987 by John Castle, former president and chief executive of Donaldson, Lufkin & Jenrette, the investment bank that now is part of Credit Suisse Group, and Leonard Harlan, former chairman of The Harlan Company, a property and corporate finance advisory firm.

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