Nicolas Berggruen, the Karstadt department store chain owner, has teamed up with US group Blackstone to mount an improved offer for Metro's Kaufhof unit, according to a news report in German newspaper Frankfurter Allgemeine Zeitung.

The bidding group has yet to receive a response from Metro, the newspaper added. So far, the retail giant has only granted access to its financial data to investor René Benko of Austrian firm Signa.

Last week Wolfgang Urban, the former chief executive of collapsed retail group KarstadtQuelle, was also said to have entered the race to take over Kaufhof. The German entrepreneur lined up a consortium of wealthy German families to take control of the chain.

The Kaufhof business is worth between EUR 2 bn and EUR 3 bn with the company owning half of its 140-odd stores.

Signa has placed an indicative EUR 2.4 bn bid for Kaufhof while the details of Berggruen's and Urban's offers were not disclosed.