Speculation is mounting that retail entrepreneur Shami Ahmed is planning to force men's wear retailer Austin Reed into a merger with rival Moss Bros.

The rumours started after Ahmed took control of 7.9 per cent of Austin Reed late last week.

He already controls a 20 per cent stake of Moss Bros, owner of Savoy Taylors Guild and Cecil Gee shops as well as the Moss chain, which he has built in the last few months.

Putting the two retailers together could create a powerful group with 3-4 per cent of the market in men's suits.

Austin Reed has been viewed as a takeover target for months and recently rejected a second approach from entrepreneur Jonathan Rowland.