UPDATED: Liberty has defended its choice to recommend an offer for the luxury department store, after a rival suitor claimed to have been frozen out of the process.

Liberty said in a stock exchange announcement on Friday afternoon that it was “fully satisfied that the strategic review process and subsequent proposed sale of Liberty has been conducted in a thorough and professional manner throughout” after Hong-based property investor Pyrrho Investment said that it had made a higher offer for the business.

Earlier this month, the Liberty board recommended a £32m - plus a £10m special dividend – offer for the department store from private equity house BlueGem Capital partners, run by Marco Capello, the former managing director of Merrill Lynch Global Private Equity.

Pyrrho Investment issued a statement on Friday morning saying that the sale process “denied any opportunity for Pyrrho to respond to the possible BlueGem offer”.

Pyrrho is controlled by retail and property investor Paul Cummins, who also owns a 21% stake in MWB  Holdings, the hotels group which owns Liberty.

In response, Liberty said that BlueGem’s offer was the best price on the table after four months of due diligence and that Pyrrho did not make any offer until May 4, two days before BlueGem’s offer was accepted.

Liberty claimed that Pyrrho’s advisers were aware that BlueGem’s offer was set to expire on May 6 and that Pyrrho declined to make a higher offer within the set timescale. Liberty added that the offer from BlueGem was “higher” and “more fully developed”.

Today, Liberty issued another statement adding that Pyrrho had “ample opportunity” to increase its proposed 185p per share offer but “refused to do so on an unconditional basis”.

Pyrrho originally proposed an offer in the range of 190 to 200p per share on May 4 but dropped it to 185p per share, below BlueGem’s unconditional 186p per share deal, said Liberty.

At the weekend, Pyrrho claimed that it had informed Liberty before May 7 that it was prepared to make a higher bid, however Liberty said that it had not received an increased offer within that timescale.

Liberty added: “The board of Liberty made an informed choice based on the proposals in front of them on 6 May 2010. This was the correct way to proceed and the board acted properly and in the best interests of the Liberty shareholders.”