Shares in Allied Carpets, which have been pummelled by an accounting scandal and difficult trading conditions, rose 12.5p to 67p yesterday, a leap of 23 per cent.
In a statement issued in response to a rise in its share price, Allied Carpets said it had been approached by "more than one party" about a takeover bid.
However, it added that discussions were at a "very preliminary stage and that there can be no certainty that any formal proposal will be forthcoming".
Analysts said that Carpetright, the rival carpet retailer run by Lord Harris of Peckham, could be interested.
However, any bid might fall foul of the competition authorities as the combined company would have a market share greater than 25 per cent. Carpetright refused to comment.
Other possible bidders include furniture retailers such as Harveys and Rosebys, both of which also offered no comment. Analysts said that the Littlewoods store group and Kingfisher, owner of the B&Q and Woolworths chains, could be tempted to make an offer, while venture capital companies might be interested in taking the company private.
Allied Carpets could be an attractive proposition for a number of bidders. Although it is one of the largest carpet retailers in the country, its market valuation is modest: even after yesterday's sharp share price rise, Allied was valued at just pounds 61m. The company recently reported pre-tax profits of pounds 11.2m on annual sales of pounds 264m.
Allied has had a troubled stock market life since it floated in the summer of 1996. In May this year it issued a profits warning, and then in July its shares were suspended after it uncovered an accounting scandal in its stores.
The subsequent six-week investigation led to pounds 3m being written off profits and the departure of Allied's finance and operations directors.
Earlier this month, Allied Carpets' shares touched a new all-time low of 46.5p - just one-fifth of their value at the time of market flotation.Reuse content