Austin Reed becomes the latest high street name to receive bid offers

Austin Reed, the struggling menswear retailer, yesterday became the third high street chain in a week to receive a bid approach.

Austin Reed, the struggling menswear retailer, yesterday became the third high street chain in a week to receive a bid approach.

Reed, which owns the Chester Barrie and Country Casuals brands as well as the eponymous Austin Reed chain, said it had rejected the unsolicited approach from an unnamed party because it was too low.

Shares in the company leapt 25p to close at 108p after the group said it was "exploring options for the future of the business with a view to maximising shareholder value".

Joan D'Olier, an analyst at Deutsche Bank, said Reed's combined assets could fetch up to 150p a share, or £47m. She said the bidder was most likely to be a foreign company seeking to take advantage of the low market valuations on UK retail stocks. Possible contenders include a Japanese company or Malayan United Industries, the 40 per cent owner of Laura Ashley, the floral skirts to wallpaper group.

Other potential bidders include Shami Ahmed, founder of the privately held Joe Bloggs chain. Philip Green, the retail entrepreneur who recently abandoned his plans to bid for Marks & Spencer, said: "I think I've got enough suits.... It's definitely not me."

A spokesman for Knutsford, the acquisition vehicle backed by the shadow cabinet minister Archie Norman, refused to comment on speculation that it was interested.

It is thought that a trade buyer would cream off the top-performing Reed businesses and convert the remaining outlets into its own brands. Alternatively, a financial buyer could snap up the company to release the value of its property assets. A management buyout is also a possibility.

Yesterday's announcement came only days after Storehouse, the Mothercare to Bhs group, said it had received a number of approaches from parties interested in buying all or part of the business.

Last Tuesday, Limelight, which manufactures and sells fitted kitchens, bedrooms and bathrooms, said it was in talks about a possible management buyout.

Reed, which owns a total of 248 outlets, including 135 concessions, has been losing ground to discount retailers and fashion chains such as Next.

Sales in stores open longer than a year fell over Christmas, hurt by discounting by its UK counterparts. In October 1999, the group reported a first-half loss of £1.97m as it met the cost of pulling out of the manufacture of unprofitable lines. Analysts have forecast pre-tax profits of about £5.75m for the year to 31 January.