SOUTHAMPTON'S De Vere hotel could be caught up in a bidding war with two groups vying for ownership of its parent.

As previously reported by the Daily Echo, the De Vere board agreed a £723m deal for the company.

But rival bidders, private equity group Permira, which owns Travelodge, is urging shareholders to wait for it to come up with an alternative offer before acting.

Boss of boutique hotel chains Malmaison and Hotel du Vin Richard Balfour-Lynn made an 825p-a-share offer, described by the De Vere board as "fair and reasonable" and "in the best interests of De Vere shareholders".

It added that, subject to clearance from the Pensions Regulator it would unanimously recommend the Mr Balfour Lynn's bid to its shareholders.

As well as the Grand Harbour, Southampton's only five star hotel, De Vere owns 19 hotels including the Belfry golf and hotel complex, the health and fitness brand Greens and the gin maker G&J Greenall. The firm employs employs 300 people in Southampton.

Mr Balfour-Lynn said: "We are delighted that we have reached agreement with De Vere on the terms of the offer which is at a significant premium to the share price prior to the recent bid speculation.

"De Vere is complementary to our existing hotel and conference business and we believe our considerable expe rience in leisure and property manage ment will help develop the De Vere business."

Mr Balfour-Lynn is chief executive of Marylebone Warwick Balfour, which owns the five star Park Lane Marriott hotel as well as 15 Malmaison and Hotel du Vin hotels around the UK.

It also operates the Liberty depart ment store in London's Regent Street.