Austin Reed agrees £49m bid from Dawnay Day

Austin Reed, the recovering men's outfitter, has finally succumbed to the advances of its biggest shareholder, last night agreeing to a £49m takeover bid from Dawnay Day.

Guy Naggar, the Gallic financier behind Dawnay Day, won board approval after he raised an earlier 131p-per-share offer to 144p per share.

Yesterday his vehicle, which first started building a stake in the retailer three years ago, scooped up a further 9.14 per cent of the company, or 2 .9 million shares. It already owned 29.88 per cent. Some analysts have said they believe the company is worth up to 160p per share, raising the possibility that the deal could flush out other bidders. Harold Tilman, the owner of Jaeger, has long been interested in Austin Reed.

But Mr Naggar said he was confident of winning control. "I don't see anybody counterbidding us because there's no way we will sell our stake. He's [Mr Tilman] interested. So what?" Nick Hollingworth, Austin Reed's chief executive, will be asked to stay on to run the group if the bid succeeds. He has turned the company round, which recently announced an interim profit of £500,000 on sales up 7 per cent at £56m, since joining two years ago.

Mr Naggar said the time was right to pounce because of the progress Mr Hollingworth has made. "We can really build it up into an international brand. We have to forget short-term gains and short-term profits to build up the company," he said.

John Robins, Austin Reed's chairman, said "shareholders' best interests" were being served by accepting the bid. The offer is worth 37 per cent more than the company's average share price over the past 12 month, he added. Shares in the group were flat at 135.5p yesterday because Mr Naggar only booked the trade after the market had shut.

Dawnay Day used to own the Chez Gerard restaurant chain, which it built up from 22 sites to 80 before it sold it on three months ago.