WHSmith shares rose by a third today after private equity group Permira emerged as a potential bidder for the troubled retailer.
The group's shares were trading at 342p, although below the level of 375p indicated by Permira - a proposal that values WHSmith at £940 million.
The interest is being led by the ex-managing director of WHSmith's former subsidiary Virgin Our Price, Simon Burke, and Moss Bros chairman Keith Hammill, who was WHSmith's finance director during the 1990s.
In a statement, WHSmith said it held preliminary discussions with Permira last week to clarify its proposal, a meeting attended by the retailer's chairman Richard Handover and finance director John Warren.
At the same time as confirming the talks, WHSmith said it was planning to cut a quarter of the 1,200 staff at its offices in Swindon and London.
The review of the group's business follows a profits warning after a poor Christmas trading performance.