Lord Harris of Peckham is pondering a bid for Carpetright, the carpet retailer he founded 16 years ago and continues to run.

Shares in the group surged 31 per cent yesterday on confirmation that Lord Harris has approached Carpetright’s board about a possible bid.

Carpetright said that it had formed an independent committee, comprised of nonexecutive directors, to consider his request. The committee, chaired by Baroness Noakes, the senior independent director, has already given Lord Harris the go-ahead to explore the possibility of a buyout bid.

The 64-year-old executive, known as the carpet king and famous for his start with a Peckham lino shop, is chairman and chief executive. He and his family own 22 per cent of the company, which he founded in 1991 and floated two years later.

The shares closed up 314p at £13.40p last night, valuing Carpetright at £906 million.

The retailer’s shares have performed well in recent years but were hit by a profit warning in April which showed like-for-like sales had fallen in the UK and Ireland. Lord Harris blamed interest rate rises for squeezing consumer spending. Carpetright shares have fallen 22 per cent since the start of the calendar year, but are up 20 per cent over the last two years.

The Olayan Group, a Saudi investor, owns 14 per cent of the equity, while some 8 per cent is owned by Harris Associates, a US fund with no connection to Lord Harris.

Carpetright has 400 stores and concessions in the UK and the Republic of Ireland. It also operates from 89 outlets in Holland and Belgium.

There is often speculation that Lord Harris will take the company private, although he recently outlined plans to appoint a separate chairman and remain chief executive for at least another five years.

He is considering his son Martin as one of several potential successors.

The independent board committee has appointed Deutsche Bank to advise it on the approach. Deloitte is understood to be advising Lord Harris. Some analysts cautioned that the share price bounce today may already have gone too far to make a takeover possible.

Lord Harris rose to prominence in the retailing industry with Harris Queensway, the furniture retailer he started in 1964 and went on to float. The group was sold in 1988, after a rival offer from Lord Harris was trumped. The firm went bust five years later.

Carpetright reports its full year results, for the 12 months to the end of April, on June 26.

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