Coffee Republic is believed to have postponed plans to unveil a merger with Benjy's early this week because of pressure from shareholders to consider other approaches, including one from Easygroup.
It is believed to be in talks with Benjy's, the sandwich operator, which wants to acquire its 100-plus outlets so that it can become a nation-wide chain and challenge Pret a manger.
Easygroup is also interested in buying the company, to expand its Easyinternetcafe operation. Meanwhile Caffe Nero is sitting on a 10.7% stake.
Benjys is thought to want to buy the business for less than its market of nearly £10m.
Easygroup succeeded on Friday in getting Coffee Republic to give it the information it wanted to examine the 107-outlet property portfolio. It wants to convert the outlets into franchised easyinternetCafes. Easygroup's founder, Stelios Haji-Ioannou, said he would not make an offer until he had seen the leases on the sites.
Coffee Republic agreed to hand over the information on the condition Haji-Ioannou signed a non-disclosure agreement.
Caffe Nero, which has an agreement with Easy Group's internet cafés to operate a coffee bar, could be a beneficiary in the event of a carve-up or as a potential partner, although it is no longer regarded as a likely bidder, the Financial Times says.
Haji-Ioannou, Easygroup's founder, claimed a second coffee chain had approached him offering itself for sale. He said: "Another coffee chain has come to us and said, 'we're for sale too' though I'm not saying who it is. It was one of my objectives to flush out other sellers," he is reported as saying.
Coffee Republic was believed to be close to negotiating heads of agreement for a potential merger with Benjy's, which is controlled by ECI Ventures, the venture capitalist, with Benjy's taking a majority stake in any all-paper deal.
Haji-Ioannou said he thought that Coffee Republic should give their shareholders a chance to see a cash offer, rather than just a stock swap. However, he ruled out a hostile bid, saying it was a question of maximising value.
The coffee chain's outlets in Manchester, Glasgow and Cardiff would enable Benjys, which has 48 sandwich shops, to more than double in size.
Benjys' chief executive, Ian Rickwood, is thought to be seeking to buy Coffee Republic for less than its market value of £9.5m. A takeover by the sandwich group would leave three dominant companies, Costa, Starbucks and Caffe Nero, in the UK market.
Some of the London-based outlets could be sold to rivals such as Caffe Nero, Starbucks and Costa, the Financial Times suggested. This could put Caffe Nero, with a 10.7% stake in Coffee Republic, in prime position to cherry-pick the coffee shops it wants.
Branded coffee shops in the UK have been struggling with high rents and ruthless competition. In some areas of London there is an outlet every few metres, making it difficult to increase turnover and profits.
Coffee Republic is heavily dependent on Barclays to meet its short-term financing needs and the bank is understood to be putting pressure on the chain to secure a deal with Benjys. The group has seen its losses more than treble to £7.5m in the year to March.
It is believed to be in talks with Benjy's, the sandwich operator, which wants to acquire its 100-plus outlets so that it can become a nation-wide chain and challenge Pret a manger.
Easygroup is also interested in buying the company, to expand its Easyinternetcafe operation. Meanwhile Caffe Nero is sitting on a 10.7% stake.
Benjys is thought to want to buy the business for less than its market of nearly £10m.
Easygroup succeeded on Friday in getting Coffee Republic to give it the information it wanted to examine the 107-outlet property portfolio. It wants to convert the outlets into franchised easyinternetCafes. Easygroup's founder, Stelios Haji-Ioannou, said he would not make an offer until he had seen the leases on the sites.
Coffee Republic agreed to hand over the information on the condition Haji-Ioannou signed a non-disclosure agreement.
Caffe Nero, which has an agreement with Easy Group's internet cafés to operate a coffee bar, could be a beneficiary in the event of a carve-up or as a potential partner, although it is no longer regarded as a likely bidder, the Financial Times says.
Haji-Ioannou, Easygroup's founder, claimed a second coffee chain had approached him offering itself for sale. He said: "Another coffee chain has come to us and said, 'we're for sale too' though I'm not saying who it is. It was one of my objectives to flush out other sellers," he is reported as saying.
Coffee Republic was believed to be close to negotiating heads of agreement for a potential merger with Benjy's, which is controlled by ECI Ventures, the venture capitalist, with Benjy's taking a majority stake in any all-paper deal.
Haji-Ioannou said he thought that Coffee Republic should give their shareholders a chance to see a cash offer, rather than just a stock swap. However, he ruled out a hostile bid, saying it was a question of maximising value.
The coffee chain's outlets in Manchester, Glasgow and Cardiff would enable Benjys, which has 48 sandwich shops, to more than double in size.
Benjys' chief executive, Ian Rickwood, is thought to be seeking to buy Coffee Republic for less than its market value of £9.5m. A takeover by the sandwich group would leave three dominant companies, Costa, Starbucks and Caffe Nero, in the UK market.
Some of the London-based outlets could be sold to rivals such as Caffe Nero, Starbucks and Costa, the Financial Times suggested. This could put Caffe Nero, with a 10.7% stake in Coffee Republic, in prime position to cherry-pick the coffee shops it wants.
Branded coffee shops in the UK have been struggling with high rents and ruthless competition. In some areas of London there is an outlet every few metres, making it difficult to increase turnover and profits.
Coffee Republic is heavily dependent on Barclays to meet its short-term financing needs and the bank is understood to be putting pressure on the chain to secure a deal with Benjys. The group has seen its losses more than treble to £7.5m in the year to March.
