Shares in struggling flooring company Floors-2-Go soared 25 per cent yesterday after bosses admitted they were in talks over a possible takeover bid.

The Birmingham-based business said discussions were at a "very early stage" but offered no details on who was interested in making a move for the firm.

Floors-2-Go, which operates a chain of 140 UK stores, said the approach "may or may not" lead to an offer being tabled for the company.

Shares in the business – which is listed on the Alternative Investment Market – jumped 25 per cent yesterday to 32.5p, valuing the company at #42.6 million.

In September the group said like-for-like sales were down 8.6 per cent in the first half of the year and said profits would be less than the #5.5 million expected in the City.

The falling sales came as Floors-2-Go battled against a severe downturn in the home improvements market.

The company began as a family business in Birmingham in 1999, opening stores throughout the Midlands, then across the North, and more recently in London, the South and the East.

It floated on the London stock market in 2004 and has evolved from "cash and carry" type warehouses to retail superstores in prime high street and retail park locations.

Richard Ratner, analyst at Seymour Pierce, said he retained an estimate of 33p per share for Floors-2-Go, which valued the company at #43 million.

He said: "We are somewhat surprised, given the company’s rather chequered record, but more importantly because it is a commodity product retailer. However, when we changed our recommendation to ‘hold’, it seemed that the company was through the worst.

"I haven't got a clue who would want to buy the company, but I don't think it is Topps Tiles.

"I don't think Floors-2-Go is attractive at all at the moment, but who am I to argue if somebody wants to come in and buy it.

"It is a difficult market, where the sheds can put a great deal of pressure on Floors-2-Go."

Executives at Floors-2-Go, which has its head office in Newtown Row, in Birmingham, were last night remaining tight-lipped about the takeover talk.

The firm was set up by Robert Hodge and his sons Richard and Robert in 1999, who had previously worked in the carpet industry.

In September, the company said it had begun bouncing back from difficult market conditions.

Floors-2-Go said its recovery was continuing, with total sales between June 30 and September 3 up by 9.7 per cent, or 6.1 per cent on a like for like basis.

Overall turnover fell 1.9 per cent to #35.7 million in the six months to June 30 while pretax profits slumped 22.5 per cent from #750,000 to #580,000.

Chief executive Simon Farnsworth said: "Despite difficult market conditions in the first half, Floors-2-Go remained operationally robust with lower average store costs and strong cash generation.

"Trading conditions have shown signs of improvement over the last few months and we are on course to meet expectations for the full year."

During the period Floors-2-Go said it was responding to the trend towards higher margin engineered and solid wood flooring.