On Holiday Group founder Steve Endacott has denied rumours his company is to be bought by online travel agent On The Beach.

But he admitted his dynamic packaging company could be targeted by acquisition-hungry companies after the recession.

Speculation surfaced this week of a £6 million deal to buy the group, which owns trade bed bank Holiday Brokers and direct brand Fresh Holidays. It was set up in 2004 and in 2005 the business was valued at £4 million.

Endacott has never ruled out a merger or acquisition as a way to expand the business further, but said no such deal was in the pipeline during the current tough trading climate.

He said: “It’s not a year you would do a deal but you can never say never. We are not actively looking for a deal.”

He added consolidation in the bed bank sector meant On Holiday Group was a likely target as it did not carry any debts and was management-owned. “I would not be surprised if people were interested in us in the next year,” he said.

The current focus was on growing margins, rather than volume, as the bed bank sector begins to mature, he added, signalling an end to cut-throat price wars.

“This has been recognised by all the bed banks, particularly because there is tighter capacity because of the collapse of the XL Leisure Group and the reduction in capacity by the big two.”

On The Beach non-executive director John Donaldson denied the rumour claiming it is “wide of the mark”.