THE takeover battle surrounding high street department store Debenhams heated up yesterday as the company received a £1.66bn offer.

The cash offer, by Baroness Retail, a bid vehicle for investment groups CVC Capital Partners and Texas Pacific, beats an earlier £1.54bn takeover deal which Debenhams had been recommending to shareholders.

But directors said the latest offer, which values Debenhams at 455p per share, was a fair reflection of the company's strengths and offered shareholders an attractive return on their investment.

Debenhams is expected to strengthen its position in the North-East during the next few years with a major store at Gateshead's MetroCentre and an outlet understood to be planned for Darlington.

The widely anticipated offer comes just over a month after Debenhams agreed the terms of a separate 425p-per-share offer from investment firm Permira after spending a weekend locked in talks.

But even as the company recommended the first offer to shareholders, it continued to talk to the rival suitor.

Permira issued a statement yesterday morning noting the higher offer and saying it was considering its position.

Shares in Debenhams have climbed steadily since May this year when Permira first came forward with an indicative offer.