Sofa retailer DFS today said its executive chairman had raised the value of his proposed offer for the firm to £468 million.

Lord Kirkham, who has a 7.82% stake in the retailer, originally made a takeover approach valuing the group at £445 million in March.

DFS said today that an independent committee formed to scrutinise the proposal believed the terms of the revised offer should be recommended to shareholders in the absence of a higher bid.

It has promised to ensure any other potential offer has been studied before making a formal recommendation, but said it had not yet received any other approaches.

The new offer announced to the stock exchange raised Lord Kirkham's proposal from 415p to 435p per share, plus the right to keep an interim dividend of 7p per share.

Shareholders will also pick up any cash received by the company as a result of the outcome of a VAT dispute between former furniture retailer Primback and HM Customs & Excise.

Lord Kirkham said earlier this year that DFS would be better placed to overcome growing competition in the home furnishings market by becoming a private company.

He said the entrance of major retailers from other sectors to the home furnishings market had increased pressure on DFS.

The Doncaster-based group, which has 65 stores across the UK, warned last month that annual profits would be at the lower end of expectations as it continued to suffer from intense competition.

It described as "disappointing" a 6.3% fall in interim profits before tax and exceptional items to £24.5 million.

The company also warned that increased competition for store sites and staff was forcing it to reassess the potential for continued expansion of the DFS format.

As a result the group said profits before tax and exceptional items for the year to July 31 were expected to be around £51 million, compared with £56.4 million last year.

Since floating on the London market in 1993, DFS has grown annual operating profits from £18.6 million to £55.9 million.

Tuesday May 04, 2004