Tom Hunter poised for Selfridges bid

Selfridges, the upmarket department store group, has received an approach regarding a possible takeover bid from Tom Hunter, the Scottish entrepreneur who stalked House of Fraser earlier this year. It is thought the offer could be pitched at around 340p-350p per share, valuing the group at around £530m.

Selfridges issued a statement saying it had received an approach regarding a possible offer at "a substantial premium" to the previous night's closing price of 244.5p. It said the offer was subject to a number of conditions and that there was no assurance that an offer would ultimately be made.

The statement was issued after the market had closed in response to a sharp move in Selfridges share price. The stock closed up 5.5 per cent at 258p.

Richard Ratner, a retail analyst at Seymour Pierce, said Mr Hunter might try to put Selfridges together with House of Fraser, which he is free to bid for again in July. Another possible bidder for Selfridges is Baugur, the Icelandic retailer, which has acquired a 1 per cent stake.

Selfridges has been seen as a possible takeover target as its shares have been languishing at a discount to its net asset value of 278p per share. The group owns the freehold of its flagship store on London's Oxford Street, which is worth £348m, more than the group's current stock market value.

The business is seen as a solid performer in the retail sector, with a successful strategy of selling a range of fashion brands. Apart from its London store it has two outlets in Manchester, with a fourth due to open in Birmingham in September. A fifth branch is planned for Glasgow in 2007.

Tom Hunter, a friend of Bhs and Arcadia entrepreneur Philip Green, made his money from the sale of his Sports Division retail business to JJB Sports for £300m. He walked away from a £197m bid for House of Fraser in January after failing to win the support of the board. It was thought that Mr Hunter had hoped to put House of Fraser together with Allders, the rival retailer later taken private by former Bhs and Debenhams chief executive, Terry Green.

Selfridges reported an 8 per cent rise in full-year profits to £40.7m, on sales of £450m, last month. The former finance director Peter Williams took over as chief executive earlier this year following the departure of Vittorio Radice who has joined Marks & Spencer as head of its Home business.