Hargreaves now has until 12 noon on October 11 to make clear his intention to bid for the value retailer, or announce that he does not intend to make an offer.
In a statement, the independent directors of Matalan said it believed the extension was in the best interest of shareholders in order to give Hargreaves time to work on a 200 pence a share offer for the group.
The statement was made in agreement with Hargreaves, who still reserves the right the make an offer below 200 pence a share.
Seymour Pierce analyst Richard Ratner said: 'We can only assume that Hargreaves, without digging into his own pocket, is raising the amount of cash needed.'
In July, both Hargreaves and the independent directors of Matalan accepted the original Takeover Panel deadline of September 12, agreeing that accepting it was in the best interests of shareholders to set a timetable in relation to any potential offer.
Reports first surfaced in early July that Hargreaves was working on a bid to take the business private. Hargreaves owns a 53 per cent stake in the discount retailer.
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