Upmarket department store Harvey Nichols looks set to revert to private ownership after the firm said it had backed a takeover bid from its biggest shareholder.

The shareholder, Broad Gain, is offering 250p a share for the 49.9% of Harvey Nichols stock that it does not already own, valuing the company at about �137.5m ($212.6m).

The offer, which represents a 35% premium over Harvey Nichol's latest closing price of 184.5p, pushed the firm's shares up by a third to 246p in late afternoon trade on Wednesday.

John Gray, one of the non-executive directors charged with protecting the interests of Harvey Nichols' shareholders, described Broad Gain's bid as an "attractive opportunity."

"The independent directors intend to recommend that Harvey Nichols shareholders vote in favour of the proposal," he said in a statement.

Cashing in

Broad Gain's director, Hong Kong-based businessman Dickson Poon, said the takeover would allow Harvey Nichols' smaller investors to unlock the value of their shares, which are rarely traded.

"It represents good and certain value for shareholders in turbulent equity markets," he said.

A takeover by Broad Gain would return Harvey Nichols, which has been listed on the London Stock Exchange since 1996, to private ownership.

Harvey Nichols' shareholders are expected to vote on whether or not to accept the offer by the end of December.

"It seems, given where the market was valuing it, a not unreasonable premium," said Seymour Pierce analyst Richard Ratner.

Luxury retailer

Harvey Nichols, which traces its origins back to a London linen shop opened in 1813, has become the store of choice for Britain's rich and famous.

The firm, which has its flagship store in London's affluent Knightsbridge district, has outlets in Leeds, Birmingham and Edinburgh, and is planning further expansion next year.

The company's profits for the year to March were down by a fifth at �12.5m, partly as a result of a decline in free-spending tourists in the wake of the 11 September attacks.