Discount retailer Peacock could set a first for UK business by becoming the first company to be taken over by hedge funds.
Peacock is in talks over a #400 million buyout by managers who are being financially backed by a group of US hedge funds, it has been claimed.
The group owns 23 Peacock clothes stores in the West Midlands - including a flagship outlet in Birmingham's Pallasades shopping centre. The group also has 30 bonmarches and six branches of the Fragrance Shop in the region.
Hedge funds are largely unregulated and popular among wealthy individuals and institutions because of the high returns that they can generate even when the stock market is falling.
They usually concentrate on high-risk speculation on movements in bonds, derivatives and currencies so any move into buyouts would mark a new trend in the UK. But the lure of fast profits has attracted a number of ordinary investors in recent years, pushing their assets higher and giving them more scope to diversify.
Among the hedge funds thought to be backing the Peacock bid is Och-Ziff Capital, which lent money to US sports tycoon Malcolm Glazer to buy Manchester United.
Peacock revealed last month that it was in takeover talks for the second time in half a year.
Analysts initially believed a buyer would have to pay #444 million to land control, so the indicative figure mooted in yesterday's report could disappoint the market. Shares in Peacock initially moved lower but recovered to stand at their opening mark of 310.5p, valuing the company at #368.6 million.
Peacock has proved to be one of the better performing retail stocks after recently revealing a 4.3 per cent rise in like-for-like sales at its 434-strong chain of Peacocks stores.
Bonmarche, which trades from 349 outlets and has suffered from aggressive discounting by rivals such as Asda and Tesco, posted flat sales while the recent acquisition, The Fragrance Shop, was 2.5 per cent higher.
While shares have rallied from a low of 64.5p at the end of 2002, market rumours have persisted about the chances of a management buyout.
Analysts expected finances to be put up by private equity houses rather than hedge funds after a flurry of interest in retail this year.