ALTHAASED floorcoverings group Gaskell plc could be facing a takeover battle after one of its leading competitors increased its stake in the business.

The Granwood group, based in Chesterfield, has bought more than 1.1 million shares in the company to take its holding to just over 29 per cent -- right on the limit before having to make an offer for the entire business.

Gaskell announced more than 100 redundancies last year at its East Lancashire sites at Altham, Clayton Park, Rishton and Bamber Bridge, where around 500 people are still employed.

In December, the company issued a profits warning to the Stock Exchange when it announced it expected to make a loss in 2001.

Later that month, Gaskell said it welcomed the fact that its highly-profitable competitor Granwood had taken what was then a 24.3 per cent stake in Gaskell. "The board welcomes Granwood as a strategic investor and notes that it has no current intention of making a bid for the company," it commented at the time.

Company bosses at Gaskell were unavailable to comment on Granwood's latest shares swoop.

Granwood is owned by multi-millionaire entrepreneur, Michael Pass, whose wealth was estimated at £50 million in the latest Sunday Times Rich List. Granwood's main subsidiary is its National Floor coverings operation.

Shares in Gaskell have fallen from almost £1 in mid-2000 to 43p this week, although they have risen from a low of 31p last December.

While issuing its profits warning last month, Gaskell also said it was looking to further reduce costs after continuing difficult trading conditions.

The job cuts followed the announcement of an operating loss of £352,000 for the six months to June 2001.

Gaskell said it anticipated that the benefits of a restructuring programme will start to show through in the next financial year, though it was not yet able to see any indications of a recovery in its markets.