A statement to the Stock Exchange said that the company had "received a preliminary approach, led by the chairman of Chelsfield, Elliott Bernerd, with the support of management, which may lead to a cash offer being made for the company. Matters are still at an early stage and there is no certainty that any offer will be made."

Analysts expect the bid to be around 300p per share, a 21% premium to yesterday's closing price of 247p but a 10% discount to the group's estimated triple net asset value of 334p per share. An offer in this region could value the company at about £850 ($1.4 billion).

Chelsfield is involved in some of the biggest regeneration developments in London, including Stratford City in east London; White City in west London and Paddington Basin in the West End. But company management believes that the speculative nature of these developments does not sit easily with shareholders who could be reluctant to put up with some of the high-risk but potentially lucrative developments Chelsfield would like to pursue.

If the deal goes through it will be biggest public-to-private buy-out in the quoted property sector since MEPC was taken over three years ago. That deal paid out company directors millions of pounds.

The Chelsfield chairman is being advised by Rothschild, the investment bank which helped him float the company in 1993, although he is not yet at the stage of having funding in place.