The BBC's Nick Higham examines what a takeover could mean for the future of English football

The company's shares rose 35% in early trading, before finishing 30% higher at 206.5p.

Earlier on Monday Manchester United and BSkyB issued statements through the London Stock Exchange confirming they are in takeover talks.

They said the talks "may or may not lead to an offer being made" for the UK's biggest and richest football club.

The companies said a further announcement will be made in due course.

BSkyB is thought to be willing to offer 225p a share for the club, a premium of more than £160m to its closing market value on Friday.

Competition probe

However the bid will face close scrutiny from the British competition watchdog.

Neil Bennett gets the fans' views on the move

Trade and Industry secretary Peter Mandelson said that the Office of Fair Trading (OFT) would examine any bid for Manchester United "very completely and extremely searchingly".

A bid of this nature would be "of enormous interest and importance to a lot of people", Mr Mandelson added.

MPs have already raised concerns about the possible takeover.

Tony Lloyd, Labour MP for Manchester Central said: "There are and must be questions about the future of the club as a footballing club."

"Obviously the concern must be that if Mr Murdoch and his broadcasting empire already controls a big part of live football and with Manchester United as one of the prime football teams, it potentially gives a degree of control that could be unhealthy from the point of view of the ordinary supporter," he added.

The BBC's Torin Douglas: "Many fans are unhappy with the deal"

Confirmation of the talks comes as reports suggest that leisure group Enic may join the bidding for Manchester United.

The Financial Times says the group, which has extensive interests in European football, is poised to submit a rival offer to BSkyB's £575m bid.

Martin Edwards: Set to sell

The group owns Vicenza of Italy, Slavia Prague of the Czech Republic, AEK Athens of Greece and a 25% stake in Glasgow Rangers.

BSkyB, 40% owned by Rupert Murdoch, confirmed negotiations are taking place after the story was reported in the UK press on Sunday.

Several newspapers are now reporting that the deal will be completed by the end of the week.

Bid provokes anger

United fans speak out

The news has provoked an angry reaction from fans and politicians, who say the deal will give Mr Murdoch too much power in football.

Fans fear the club will be less independent if owned by BSkyB, which has rights to screen live Premiership games.

Tommy Docherty: "They're not footballing people"

The former Manchester United manager, Tommy Docherty, has added his voice to the criticism, saying the takeover would "rip the heart" out of the club, according to the Daily Mail.

He told the newspaper: "While United are already big business, you still feel that they are being run by football people.

"When someone like a Rupert Murdoch comes in, you are taking big business too far."

The UK Sports Minister, Tony Banks, is also concerned about the takeover.

He told the BBC: "This can't be treated as if it were just a normal takeover of one publicly quoted company by another."

The Director General of the OFT has been asked to advise ministers over whether a full inquiry will be necessary.

The OFT is already taking BSkyB, the Premier League and the BBC to court next year following allegations they are operating a cartel that does not allow clubs to strike their own individual television deals.