Struggling department store group Allders saw its share price rise after confirming it had received a takeover approach.

Shares in the Croydon-based retailer, which has stores in Chichester and Crawley, surged 11 per cent after it said talks with the unnamed third party may lead to a cash offer for the business.

The group said: "Discussions are at an early stage. A further announcement will be made when appropriate."

Allders has been the subject of takeover speculation ever since issuing a shock profits warning two months ago after poor summer sales.

Its shares, which fell 42 per cent below their 174p high for the year last month, edged up yesterday.

Analysts believe the suitor could be property investment group Minerva, which already holds a 25 per cent stake in the business.