Zakspeed, the German motorsport company which was involved in F1 in the 1980s, are understood to have been in talks with Arrows boss Tom Walkinshaw.

"We are unable to comment on speculation," said a team spokesperson today.

"We hope to be able to make an announcement in due course which will put the rumours to rest."

Walkinshaw said recently: "There are people who have investors looking to get into F1. We are listening to them.

"We are doing our own car and engine, but at this level you can't do it all on your own."

Walkinshaw has a sporting empire worth £300m and his other interests include the Gloucester rugby union club which he bought for £2.3m in April 1997.

He was also recently appointed the new chairman of the body representing England's top rugby union clubs.

Toyota and African link?

Zakspeed's interest - former Benetton boss Flavio Briatore has been appointed a consultant - could be linked with Toyota's planned Formula One entry in 2001.

If the deal goes through, it could mean the Oxfordshire-based team, which is part of Walkinshaw's TWR Group, moving to a new base at the Nurburgring in Germany.

But there may be a counter-bid to Zakspeed.

Walkinshaw is also understood to be in talks with Prince Malik Ado Ibrahim of Nigeria, a long-time friend, about the team.

The Arrows team has struggled to reach the higher echelons of F1 despite signing then world champion Damon Hill in 1996.