Sources close to Tapis said the company was spending the weekend assessing financial information given by Allied, with a view to putting an offer of about 95p to the Allied board on Monday. Tapis yesterday said it was considering a cash bid and believed that a tie-up would generate significant benefits.
An 80p per share cash bid from Wassall, the mini-conglomerate, is the only formal offer made since Brown & Jackson, the Poundstretcher retailer, made an initial approach last month indicating a price of 50.5p.
Wassall already owns 24 per cent of Allied. Geoff Brady, Allied's new chief executive, said: "The uncertainty over the bids should be over in days."
Brown & Jackson said it was monitoring developments with a view to possibly re-bidding.
Mr Brady meanwhile unveiled plans to phase out the Allied Carpets brand, which he said did not fit with the upmarket profile of its customer base. Allied is to convert three stores to a new concept in the coming weeks. If successful, 50 conversions could follow next year. No name for the brand has been chosen, although in March Allied launched a new in-store curtains brand called "Aspects at Allied Carpets". The new name would have the "at Allied Carpets" suffix, Mr Brady said.
It also emerged Allied Carpets had threatened to sue Brown & Jackson were it to blame any withdrawal of its interest on the financial information it was given by Allied for due diligence.
Allied posted full-year losses of pounds 4.2m on sales down 4 per cent at pounds 294.1m. The shares were unchanged at 89.5p.