Coffee Republic cool on Stelios approach

The bidding frenzy for Coffee Republic heated up yesterday after it emerged that Stelios Haji-Ioannou, the easyGroup entrepreneur, had approached the loss-making chain about a possible takeover.

A move by the easyJet founder would threaten the group's merger talks with Benjys, which could see the privately owned sandwich bar chain reverse into Coffee Republic and list its shares on AIM market for small companies.

Mr Haji-Ioannou would like to use Coffee Republic's 107 outlets as an easy expansion route for his easyInternetCafés. However, he cannot make a takeover offer for the group because it is refusing to provide financial information about the business and its rental obligations.

Coffee Republic is under pressure to find a suitor to bail it out because it is unable to meet its own short-term financing needs without the help of its banker, Barclays. Bobby Hashemi, the group's co-founder and executive chairman, is reviewing the group's strategic options following a £7.5m loss last year.

While the group has admitted to receiving "an approach" it has declined to comment further. "As and when something concrete happens we'll tell the stock exchange," a spokeswoman said.

Mr Haji-Ioannou said the Coffee Republic outlets would suit the new, smaller format of his internet chain. After a disastrous experiment with large sites capable of holding 500 screens, which cost Mr Haji-Ioannou millions of pounds, the new look chain of nine stores is focusing on smaller sites and franchising the catering to operators such as Caffè Nero.

He said that the ball was in Mr Hashemi's hands. "You can't force a company to give you information. All I can do is to hope they will decide as a board that in order to maximise value to shareholders they will release the information." However, he added that he was "not particularly wedded" to Coffee Republic. "I'm sure there are other people out there," he said.

The Greek entrepreneur said he was also talking to Starbucks about an agreement to supply internet terminals in its stores, which has installed internet computers at some of its London outlets on a trial basis.