Fennell, the Aim-listed jeweller, saw its shares jump nearly 30 per cent yesterday after it confirmed it is in takeover talks with EME Capital.
The company said discussions were at a “very preliminary” stage, and may or may not lead to an offer being made.
A spokesperson for the jeweller declined to comment further.
The group sells jewellery and watches designed by its founder Theo Fennell – also known as the “King of Bling” – who still owns a 16.1 per cent stake in the company.
The chain has been loss-making since 2009 after struggling to recover from the recession and has recently turned its attention to China and emerging markets to drum up sales.
EME, a private equity and financial advisory group set up in 2010, must either announce a firm intention to make an offer or walk away by 3 October.
Shares closed up 27.7 per cent at 15p.