CareTech focuses on specialist care and housing support services for adults with learning and physical disabilities, and the proposed acquisition would help it expand its presence in specialist education and behavioural health services for children.

Cambian said on Tuesday the preliminary proposal amounted to 220 pence per share for the company in cash or shares, a premium of 48.4 pct to Cambian's Monday close of 148.2 pence.

CareTech has also proposed a possible alternative full-cash offer of 200 pence per share, Cambian said, while cautioning that the discussions were still at a preliminary stage and it was not clear if an offer would finally be made.

CareTech has until Aug. 7 to make an offer or walk away under UK stock market rules, the company said.

Sky News reported https://news.sky.com/story/caretech-plots-600m-social-care-merger-with-rival-cambian-11431401 on Monday that CareTech approached Cambian with a 210 pence-a-share offer several weeks ago.

(Reporting by Justin George Varghese in Bengaluru; Editing by Amrutha Gayathri)