The Allders department store chain has agreed to a takeover offer aimed at revamping its image and boosting profits.

The offer has come from a new investment group called Scarlett Retail. It is made up of the property company Minerva, Lehman Brothers investment bank and a management team including Terry Green, the former chief executive of Debenhams and BHS.

Scarlett said it believed there was " inherent value in the Allders business, which can be more readily realised by taking Allders private".

"We have also considered the risks of any further weakening in consumer confidence and general trading conditions Brian Fidler, Allders chairman

The offer values Allders, which has 44 stores, at �158m or 160p per share - a 36% premium to the department store's value before news of the potential bid emerged in November.

Management boost

Minerva has been stalking Allders for some time, building up a 26% stake in the company and admitting in November that it was interested in making an offer.

The management team will be bolstered by veterans of the industry Terry Green and Phil Cox, who have each bought a 10% stake in the venture and will become chief executive and commercial director respectively.

Mr Green, no relation to the more flamboyant retail entrepreneur Philip Green, stepped down as chief executive of BHS in June with a reported pay-off of about �1m, and has since been linked to a number of retail projects.

The Oxford St opening was highly publicised

Allders has also been the subject of much takeover speculation as its ambitious expansion and refurbishment programme has yet to translate into profits.

In November, the group rerported profits had halved in the year to September, largely because of poor summer sales.

Earlier this week, retail entrepreneur Tom Hunter - who has also made an offer for rival department store chain House of Fraser - fuelled rumours by acquiring a 1% stake in Allders.

A spokeswoman for Allders said the group had received other approaches but would not say whether or not there had been any interest from Mr Hunter.

"The other offers are in the preliminary stage and there can be no certainty that a bid will emerge," said the spokeswoman.

Take the offer

Allders is recommending shareholders accept the offer from Scarlett Retail.

In order to get the price of the Croydon site down, it needs to buy the lot Richard Ratner, Seymour Pierce

Despite insisting that its modernisation plans were on track, the department store chain said weak conditions on the stock market and the High Street prompted it to accept Scarlett's approach.

"We have also considered the risks of any further weakening in consumer confidence and general trading conditions," said Brian Fidler, chairman of Allders.

Minerva also has an interest in acquiring Allders because of its large property development in Croydon, where Allders currently occupies the top spot.

Critics have suggested Minerva overpaid for the project and could now recover some of the costs by leasing the Allders plot to one of the more lucrative offers now coming through from rivals such as John Lewis.

"In order to get the price of the Croydon site down, it needs to buy the lot," said retail analyst Richard Ratner at Seymour Pierce.