Shares in Australian retailer Rebel Sport Ltd spiked 18.1 per cent higher Monday, overshooting Harvey Norman Holdings Ltd's friendly 83 cents a share takeover bid.

Dealers said investors, particularly institutional shareholders, aren't rushing to accept the offer because of growing expectations of a counter-bid.

Rebel shares climbed 13 cents to A$0.85 on turnover of A$1.2m. Retail investors accounted for most of the activity.

By contrast, Harvey Norman slid three cents or 0.8 per cent to A$3.89 and the broader market fell 0.5 per cent.

Late Friday Harvey Norman revealed its first major step outside its core furniture and electrical goods business with its takeover bid for Rebel, valuing the target at A$52m.

The board of Rebel recommended shareholders accept the bid in the absence of a higher offer.

In addition, joint managing directors Ian Dresner and Hilton Seskin, who under the conditions of the bid would stay with Rebel for two years and each receive two million options, have indicated they will sell half of their combined 13 per cent into the offer.

One Melbourne-based retail analyst said he was astonished by Harvey Norman's play for Rebel. "It caught us by surprise. We never expected them to go into sports retailing," the analyst said.

"But I expect when the takeover is completed they will be a bit more forthcoming with the market about the strategy behind it. Until then, it's hard to work out why they are there."

Harvey Norman executive chairman Gerry Harvey has a 9.7 per cent stake in Rebel, while the company's offer is conditional on snaring 50 per cent of Rebel. The Melbourne-based Besen family controls 19.7 per cent of Rebel.

However another major stakeholder, Singapore-based Goh brothers, with 19 per cent, have previously attempted to gain control of Rebel and market speculation suggests they may be prepared to enter the fray. George and Joe Goh are both directors of Rebel.

"I'm assuming that the market must believe there is something out there," said one head of institutional sales based in Sydney. "It's anyone's guess, to be honest."

Rebel said Friday profit after tax in 2000-01 was expected to be "marginal and significantly down" on the prior year's A$4.5m, due to one-time items such as writedowns on old stock within its Glue chain, a loss on the sale of its stake in online retailer dstore, and the July 1 introduction of a 10 per cent goods and services tax.

If successful, Harvey Norman intends to run Rebel as a stand-alone entity and has identified opportunities to expand the 40-store chain.