Yesterday Signature accepted a 60p-a-share offer from its management, chairman Luke Johnson, chief executive Andrew Bassadone and finance director Nicholas Fiddler.
However, Lotto, who also owns A to Z Restaurants, is believed to be considering a counter-bid of 70p a share, backed by Park Place Capital, a hedge fund which already owns 29.6% of Signature.
It is thought Lotto would keep Signature's top three restaurants, including J Sheekey, and sell Belgo and the small Strada pizza chain.
In a joint statement Signature and the MBO vehicle, called Pinco 1771, said the management's offer price represented a premium of 43.7% to the closing middle-market price of 41.75p on May 2, the last business day prior to the announcement by Signature that an offer approach had been made.
In September the company reported a drop in underlying profits to £3.1m from £4.3m in 2001, blaming difficult trading conditions particularly in central London. Post-exceptional pre-tax profits came in at £2.3m, against a loss of £1.3m last year. Total sales for the 12 months up to June 30 were 1.4% down at £39.4m.
The Belgo and Bierodrome division, whose flagship Belgo Centraal depends heavily on tourist business, suffered most with like for like sales down 15%. The company has since disposed of Belgo in Dublin, Bristol and Ladbroke Grove and Bierodromes in Fulham and Clerkenwell. It is now left with two Belgo restaurants and three Bierodrome bars. However all the units are trading below previous years.
Caprice Holdings, consisting of the Ivy, J Sheekey and Le Caprice, performed well, the company said, maintaining their high reputations and solid profits.
The group's London-based Strada pizza and pasta brand also continued to perform well, Johnson said. During the year a further three were opened bringing the total to nine with a further two under construction.
However Johnson was careful not to over-hype Strada's potential, saying its contribution to the group's overall profitability remained relatively modest, owing to the size of the sites and the relatively low average spend. He said: "We remain focused on expanding this division with a cautious approach to site selection. Our objective is to open a further four Strada over the next 12 months."
If the MBO succeeds, all future openings would be restricted to the Strada concept and funded from cash flow.