DEBENHAMS has held secret talks about mounting a takeover of the menswear chain Moss Bros, it emerged this weekend.

The revelation will boost hopes that Moss Bros will be able to attract a bid to top an outline offer already tabled by Icelandic retail group Baugur.

Talks with Debenhams have been informal, and have now been suspended, say City sources. News of the approach will come as a shock to retail-watchers, though, who have seen Debenhams’ own share price collapse from more than 200p less than two years ago to a mere 56p now.

Investors are already betting that Baugur’s 42p-a-share outline bid, which would value Moss Bros at just under £40m, will be bettered. Hopes of a higher counter-bid pushed Moss Bros shares to 46Çp on Friday night.

Baugur has been given until the end of April to table a formal bid for the company or walk away. Moss Bros’s founding Moss and Gee families, who together own nearly 27% of the company, are holding out for a higher offer.

A number of other significant stakes have been built up. John Hanson, founder of the Greenwoods menswear chain, who has acquired a 2.8% holding, ruled himself out of the race last week. He reportedly said he didn’t “want to get involved in a free-for-all”.

The fashion and furnishings chain Laura Ashley recently bought shares at 46p and increased its stake in the company to just under 6%.

And Moss Bros, which runs 150 stores across Britain, has revealed that a mystery investor has acquired a 7.9% holding in the company through the French bank Crédit Agricole.

The Moss Bros group owns and operates the franchise for Hugo Boss and Canali. It includes the Savoy Taylors Guild, Cecil Gee and Moss Direct, a mail-order and internet-shopping division.

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