Nando's looks to trump bid from Luke Johnson for PizzaExpress

PizzaExpress yesterday spiced up its menu with the prospect of a bid battle after an agreed £263m takeover offer from Luke Johnson, its former owner, was challenged by a potential rival bidder.

Shares in the struggling pizza chain surged 16 per cent to 383p on the news that a consortium, including the owners of the Nando's chicken chain, said it was considering trumping Mr Johnson's offer.

TDR Capital and Capricorn Ventures International (CVI), two venture capital groups, revealed themselves as the third mystery bidder for the pizza chain. But City sources said that a management buyout team led by the chief executive David Page, which had the backing of the European buyout company PAI, had been outbid. Mr Page is expected to quit the company if Mr Johnson's bid succeeds.

TDR and CVI said they were "considering whether to make an offer ... at a premium to the offer price announced by [Mr Johnson's bid vehicle] Venice Bidder".

The development marked a return to the fray for CVI, the majority investor in Nando's International, which last year teamed up for an abortive bid with Hugh Osmond. It is keen to expand Nando's in the UK.

Mr Johnson, who alongside Mr Osmond floated PizzaExpress 10 years ago, has bid 367p a share. He is partnered by Ian Eldridge, the pizza chain's former chief executive who left 12 months after he fell out with the board, and has backing from ABN Amro Capital, the Dutch bank's private equity arm.

He refused to detail his plans for the chain yesterday, but said his first focus would be on improving the existing restaurants. Mr Johnson also said closures were not on the agenda.

PizzaExpress has been in off-and-on bid talks since November, after its stock market value collapsed on the back of poor trading across its 311 restaurants. Despite launching a rescue plan and bowing to popular pressure to enlarge the size of its pizzas, underlying sales at the group have continued to plummet.

A bid by TDR and CVI would mark the first venture for Manjit Dale and Stephen Robertson, both former Deutsche Bank executives who set up TDR last year. Mr Dale has a history of dealmaking in the leisure sector, including Deutsche's £670m purchase of Center Parcs. He also led Mr Osmond's takeover of Punch Taverns.

Mr Johnson, as part of the management team, has injected £5m and will share 20 per cent of the group's equity. ABN Amro Capital is contributing £110m while Royal Bank of Scotland and HSBC are providing £165m in debt financing. PizzaExpress has agreed to pay a £2.6m break-fee if the deal does not go through.

Venice Bidder yesterday acquired an 8.7 per cent stake in PizzaExpress.