In a statement his company, West Coast Capital, said it was reviewing its options in relation to the department store and "may or may not make an offer".

There has been growing press speculation that Mr Hunter is building a stake in Allders in order to block a takeover of the company by the property firm Minerva.

The Scottish businessman has also approached another department store, House of Fraser about a possible offer.

He is thought to be interested in merging parts of the two businesses in order to cut costs.

Poor performance

In his company statement, Mr Hunter said that he had not entered into any agreements or arrangements with Minerva, which holds 26.2% of Allders.

Terry Green, a former Debenhams and BHS chief executive, is the retail brain behind Minerva's £132m bid.

House of Fraser, whose stores include Barkers of Kensington and Rackhams in Birmingham, has underperformed in recent seasons.

Retail analysts believe that merging House of Fraser and Allders chains, which together boast nearly 100 stores, could present considerable opportunity for consolidation.

House of Fraser will give an update on its Christmas trading on Thursday.