High street book-seller Ottakar's is in talks over a possible management buyout, the company said yesterday.

Ottakar's said private equity investors were backing moves by executives, including managing director James Heneage and chairman Philip Dunne, to take control.

The company disclosed the takeover talks in response to a recent nine per cent recovery in its share price to 281p since its annual meeting last month.

At the close of trading on Monday, Ottakar's was valued at £61.6 million and its shares opened nine per cent higher.

The company said a three-man committee of independent directors had been formed to lead the talks because of the involvement of senior executives in the bid approach.

The news comes a month after shares in Ottakar's plunged seven per cent as it revealed that like-forlike sales in the four weeks to July 16 were 6.7 per cent lower than a year earlier.

The chain has felt the force of supermarkets slashing the prices of bestsellers in an effort to eat into its market share.

Ottakar's, which is represented in Walsall, Banbury, Burton-on-Trent, Stafford, Sutton Coldfield, Bromsgrove and Worcester, blamed heavy discounting for disappointing sales of the sixth instalment in the adventures of Harry Potter, which it sold for £11.99 at its 136 stores compared with £4.99 at one of its supermarket rivals.

At the same time, it is thought that publishers were reluctant to release any other titles during the period because of the buzz of publicity around the launch of Harry Potter And The Half-Blood Prince.

The shock update encouraged many in the City to rethink their estimates for Ottakar's results for the current financial year, with a consensus of ten banks now looking for profits of £7.2 million compared with £7 million a year earlier.

Seymour Pierce analyst Rhys Williams said a private equity bid could be around £75 million or 335p a share, but it was unlikely that any rival book chains would join the race at the moment.

It was probably the wrong time for WH Smith to be making an acquisition because it was in the middle of turning around its own business, he said, and another rival, Waterstone's, was pressing ahead with a store opening programme.

Ottaker's shares closed up 45.5 at 326.6p.