U.S. private equity firm Carlyle Group is set to challenge Permira for control of Valentino by offering 36 euros per share, a financial source said, sending shares in the Italian fashion group to a record high.
Carlyle said on Thursday it had not made a final decision on a takeover offer for the group, best known for its floor-sweeping gowns designed for Hollywood stars.
But a source told Reuters earlier that Carlyle's offer, which values Valentino at 2.67 billion euros ($3.61 billion), would top the 35.65 euros per share Permira agreed to pay for 29.6 percent of the group on Wednesday.
Permira has said it would pay the same price to other investors willing to sell out.
"Carlyle is about to launch a takeover offer at 36 euros for Valentino," the source said.
"As things stand, no decision has been taken yet ... Carlyle does not exclude assessing eventual opportunities that the market could offer," Carlyle said in a statement.
Permira declined comment.
Shares in one of the world's top fashion houses -- its brands include Marlboro Classics and Hugo Boss -- rose to a new high of 37.81 euros before settling at 37.40 euros, up 5.86%, in heavy volume.
"Valentino has gone up to the price of Carlyle's offer," one analyst said. "I can't understand why the battle is so fierce now when funds could have bought it six months ago when the price was less."
Valentino said in a statement its board had received a letter from Permira addressed to all shareholders regarding an offer and that it had accepted a request by the fund for a confirmatory due diligence by the end of May.
Permira and Carlyle had also been in talks with Canova Partecipazioni, owner of 19% of Valentino, which was founded in 1962 by creative director Valentino Garavani.
Stefano Marzotto, who owns the Tidus holding with his brothers, told Reuters on Tuesday they had also been approached for their 12.42% stake but had yet to get a firm offer.
Private equity firms are relatively new players in the fashion and luxury goods business, attracted by the strong demand for bags, clothes and other products from a growing number of affluent consumers across Asia.
Permira, whose biggest investor is SVG Capital, owns retailers New Look in Britain and Spain's Cortefiel.