TJ Hughes facing auction as Gorman's approach is rejected

The discount retailer TJ Hughes, hit out yesterday at a possible takeover bid by Scottish retail entrepreneur Chris Gorman saying the offer "in no way reflects the fair value of the business".

Mr Gorman has said he would only offer around 95p a share for TJ Hughes, valuing the group at around £29m. The offer is well below the current share price, which closed 13.5p lower at 120.5p yesterday.

Advising shareholders to take no action, TJ Hughes said it is in discussions with "a number of other interested parties, one of which is the management team, which may or may not lead to an offer".

Mr Gorman made his money from the DX Communications mobile phone chain and later sold his Reality e-commerce business to GUS for £35m last year. His consortium includes Tom Hunter who sold his Sports Division retail chain to JJB Sports. It was thought Phillip Green, owner of Bhs and Mark One, might also be involved but he denied this yesterday.

Mr Gorman also denied he was deliberately attempting to drive the price of TJ Hughes down. "Hand on heart I'm not trying to do that," he said.

The other bidders, which include the management team and an unnamed consortium, have signed confidentiality agreements.

TJ Hughes issued a trading update yesterday saying like-for-like sales for the second half were running 5 per cent up on the previous year. This compares with a 3.9 per cent increase announced on 26 November.

The company denied margins on the sales were low, saying it was full-priced new stock. Old excess stock that caused a profits warning earlier this year has been returned to the warehouse.

Separately, HMV Media reported improved figures yesterday with gains made by the HMV music chain and Waterstone's, the bookseller. In the 13 weeks to 27 October sales were up by 6.7 per cent on the previous year to £364.8m. Earnings before interest, tax and depreciation were up 19.7 per cent to £21.5m. HMV grew like-for-like sales 8.5 per cent helped by Kylie Minogue and Nellie Furtado CDs. Waterstone's sales rose 1.9 per cent with Harry Potter books still top of the charts.