British Mohair is set to make a move for the fabric and accessories manufacturer, Yorklyde, which makes fabric for upmarket retail outlets.

Back in March, British Mohair - bought two years ago by the Browallia business of Swede Peter Gyllenhammar - took a 28.26 per cent stake in Yorklyde. It has now acquired options on another 29.94 per cent, exercisable on our before July 12.

Once the options are exercised, British Mohair will have to make an offer for the whole of Yorklyde under stock exchange rules.

Yorklyde's factories produce bespoke fabrics in cashmere, cashmere mixes and lambs wool - fabrics used extensively in designer collections - as well as luxury accessories like scarves.

The company has been hit by a dip in the luxury end of the market since the events of September 11 in the United States. In January its annual figures showed that profits had fallen from £426,000 to £307,000.

Analysts, however, see it as a sound business and a good acquisition for Browallia.

By Clive Hinchcliffe