Final bids for Dreams due next week as buyers including Sir Philip Green circle

The four bidders left in the process – RBS’ private equity arm, Green, founder Mike Clare and SCS-owner Sun European – are expected to lodge final bids for Dreams on March 1. The process is expected to conclude by March 15, although sources close to the situation indicated that a final offer could be accepted before that date.

It is thought Green is attracted to Dreams because of the synergies with his BHS department store business, which also operates standalone home stores.

Clare’s offer is backed by Apollo Management, which acquired jewellery group Aurum in December.

It is thought that about 30 approaches were made for the business initially.

Ernst & Young was hired to handle a sale process in December after a prolonged period of uncertainty during which time Dreams owners Exponent and its banks, led by RBS, were unable to agree on a strategy for the beds retailer.

It is possible any deal could result in a restructure of the business, including a pre-pack administration, which would enable the new owner to shed stores.

A Dreams spokeswoman said:  “There has been a great deal of interest from potential buyers as a result of the market-leading position Dreams has. The business is trading well and customers and suppliers continue to be supportive.”

Dreams like-for-likes increased 7.2% in the four weeks to January 7, year on year, after a £3m investment in its multichannel platform and store estate last year, as well as a focus on improving ranges and lowering prices.

In the most recent set of company accounts however, Dreams reported an EBITDA fall to £11.2m from £25.1m in the year to December 24, 2010 as the retailer invested in store openings, training and IT. Turnover grew 7% to £300m.