The founders of Ottakar's yesterday sought to squeeze HMV out of the takeover race for the book chain by upping their offer to £91.1 million.
Book Store Acquisitions - the bid vehicle of James Heneage and Philip Dunne who set up Ottakar's in 1987 - put a new bid of 400p-a-share on the table after having a lower offer accepted two weeks ago.
Analysts said this could win the day for the management team as investors holding
61.7 per cent of shares in Ottakar's have agreed to back the buyout at this price.
However, they also noted that major shareholders Morley Fund Management, which owns about 16.4 per cent, and Framlington Investment Management, which has a stake of approximately
13.6 per cent, could switch sides if HMV or another party launches a counterbid that is worth at least 420p a share.
HMV has remained tightlipped on whether it will launch a formal offer for Ottakar's, which has a number of outlets in the West Midlands, after requesting information about the company when news of the buyout plan broke. The group owns the Waterstone's chain of bookstores and some analysts have speculated a combination with Ottakar's could fall foul of competition rules.
Waterstone's controls an estimated 16 per cent of the book market and Ottakar's eight per cent, putting it close to the crucial 25 per cent threshold.
Baird analyst Paul Smiddy said: "I wouldn't immediately rule out HMV but their tardiness has put them at a disadvantage."
Analysts have also noted minimal crossover between the portfolios of Ottakar's, which has 137 stores mainly in market towns, and the larger branches of Waterstone's, which has an outlet in Birmingham.
Mr Heneage, the managing director of Ottakar's, and chairman Mr Dunne are being supported in their bid by private equity firm Phoenix. Independent directors of Ottakar's recommended the initial 350p-a-share offer from Book Store Acquisitions because there appeared to be no respite from tough trading conditions in sight.
Ottakar's has issued two disappointing trading updates already this year.