Allen & Overy is gearing up to fight in the latest City bidding war after its client, Allied Carpets, admitted that it had received offers for the company.
The troubled retail giant, which has issued two profit warnings since May 1998, has received a 65p per share offer from its largest shareholder Wassall, which would value Allied at about u59m.
Among a number of unsolicited bids, the company has also received a u45.7m offer from the retail group Brown & Jackson, which owns the Poundstretcher chain of stores.
Wassall is being advised by Macfarlanes. The firm refuses to comment on the deal.
Alan Paul, corporate partner at Allen & Overy is heading the team working on the deal with fellow corporate partner Richard Slynn.
A spokesman at Allen & Overy declines to comment on the ongoing deal until there has been a firm development in discussions.
The proposed purchase of Allied Carpets looks set to be every bit as bitter as the recent City battle between Whitbread and Punch Taverns to take over the retail arm of Allied Domecq, since the company is reluctant to accept bids.
A statement to investors from Allied Carpets says: "The directors strongly believe that the current market price of around 61.5 pence per share fails to recognise the fundamental value of Allied.
"The directors have maintained the view that it would not be in the interests of shareholders, customers or employees to facilitate an opportunistic bid for the company at an unattractive price level."