Stylo Group and value rival Shoezone are circling footwear chain Shoefayre, according to insiders.
The business has been put up for sale by owner The Co-operative Group with a price tag understood to be £2 million.
Management expect a deal to be finalised in two months and a mooted MBO has been scrapped, a source said. He added: “It doesn’t look like an MBO will be a success. The buyers are likely to be consolidators, not private equity.”
Another source added: “An auction is possible, but it doesn’t mean it will be sold as a single lot.”
Co-op turns over £7bn a year, of which Shoefayre represents about 1%, posting sales of £61.7m last year. The footwear chain recorded losses of £6.3m in 2006, and management have pledged to invest £10m in three years to turn it around (Drapers, July 7).
Co-op refused to comment further. Stylo and Shoezone were unavailable for comment.