Goody's Family Clothing Inc on Tuesday said a private equity group has offered to buy it for $6.50 to $7.50 a share cash in a deal that would allow it to continue as a separate company.

The Tennessee-based operator of 328 stores said the offer represents a premium of between 37 and 58 per cent over current market prices and would be the least disruptive to its associates and customers.

Chairman and CEO, Robert Goodfriend, said: "We are pleased to be in discussions with a financial buyer who would not only enable Goody's to continue as a separate company, but also would be least disruptive to our associates, our customers and the communities we serve.

"While there can be no assurance that a transaction can be successfully completed, we believe it is important for us to explore this possibility."

He added: "Goody's has built a strong business over two generations. We are well positioned with a solid brand name, $67.9 million in cash and cash equivalents at the end of the second quarter of fiscal 2002, and no long-term debt."