Variety store group Instore is divided over a 5p-a-share offer by Seaham Investments to take majority control of the retailer.

Seaham Investments, which already owns a 30.6 per cent stake in the company, plans to acquire an extra 20.4 per cent of the business from Tradegro, which would give it a 51 per cent controlling stake.

However, on the advice of broker Numis, Instore’s independent directors John Jackson and John Richards have warned shareholders not to accept, arguing that the offer “significantly undervalues” the retailer.

The retailer revealed it was in talks about a possible takeover bid with a third party last month.

In the year to March 1, Instore – which runs the Poundstretcher chain – made a pre-tax loss of£2.3 million, down from a loss of£9.1 million the previous year. Turnover was up 6 per cent for the period to£296.8 million and gross margin rose 1 per cent.