The bidding battle for McCarthy looks set to heat up

Under the offer - backed by Barclays Capital - shareholders would receive �10 per share, the group said.

McCarthy, the UK's biggest builder of retirement homes, said the offer represented a good deal for investors.

But it also confirmed it had received a rival offer of �10.30 a share, worth around �1.3bn, tabled by Aldersgate Investment and West Coast Capital.

Aldersgate is the investment vehicle of billionaire brothers Simon and David Reuben.

Share boost

The firm's shares shot up on news of the rival bids.

They rose 106 pence - or 11% - to 1048p in early trading.

On Friday, the firm's shares had closed at 942 pence, valuing the company at �960m ($1.76bn).

McCarthy announced it had been approached by two prospective suitors last month.

Meanwhile, a third bidder could also join the fray for the building firm.

According to weekend reports, property tycoon Vincent Tchenguiz has prepared a bid worth more than �10 a share, but it is yet to be fully financed.