Bryan Myerson, the controversial corporate raider who owns a 16.9 per cent stake in Liberty, is supporting a plan by Marylebone Warwick Balfour to take over the upmarket London department store.
It is understood that Mr Myerson has teamed up with the quoted property company in order to draw up a bid for the 125-year-old store, which is worth £52m.
Mr Myerson, who two years ago led a boardroom coup at Liberty which ousted former chairman Denis Cassidy, is hatching a plan to turn Liberty into an internet retailer.
He wants to slim down the Liberty store on London's Regent Street into its Tudor annexe and release the rest of the property for refurbishment. Income from the property, which would be converted into a serviced office centre, would then be reinvested into the internet venture.
As well as linking with the property company, Mr Myerson would use Illuminator, an internet incubator fund run by Simon Freethy, to develop the internet venture. Mr Myerson and his business partner Julian Treger have a stake in Illuminator, which is thought to have built up a £100m war chest for internet investments.
Said one insider: "Brian is very bullish and wants to change things radically. He is convinced that the best thing for Liberty would be to take it into the new world."
Mr Myerson isn't Liberty's only suitor. The Stewart-Liberty family, headed by matriarch Elizabeth, owns a 20.7 per cent stake in the store and had teamed up with property company Moorfield Estates to hatch a rival bid.
Like Mr Myerson, the Stewart-Liberty family also wants to turn Liberty into an internet retailer. But after studying price to earnings ratios in the US, where internet retailing is more established, it is thought to have revised its initial sums.
Moorfield and Liberty both declined to comment.
Richard Balfour-Lynn, MWB chief executive, said: "I don't know exactly where we are at the moment with Liberty. We haven't made a bid and haven't yet decided if we will."
The moves, which follow a disastrous attempt to open 15 stores outside the capital, come at a turbulent time for the retailer. In September, the company reported a pre-tax interim loss of £879,000, against a backdrop of a slump in sales.
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