Newbridge Capital, the US private equity firm, has emerged as a ?white knight? for Australian Leisure and Hospitality, with a A$1.1bn (US$786m) bid for the pub and liquor store group.

The surprise offer by Newbridge, which was on Tuesday recommended by ALH, trumps a A$970m hostile bid by Woolworths, one of Australia?s two big retailers, and the entrepreneur Bruce Mathieson.

The move by Newbridge, the Asian arm of the US buyout fund Texas Pacific, could ignite a bid battle for ALH, whose 133 pubs and 263 liquor stores are regarded as a prized asset in Australia?s fast-growing retail market.

Woolworths, which bought some 15 per cent of ALH in market raids over the past few months, on Tuesday declined to say whether it would increase its bid of A$2.75 per share to top Newbridge?s A$3.05 per share offer.

Both bids are above the A$2.50 price at which ALH, Australia?s third largest liquor retailer and its biggest pub operator, was spun off from the drinks group Foster?s last November. But the bids are still below the valuation of A$3.125-A$3.355 contained in a recent study by KPMG for ALH.

The shares were suspended at A$2.91 on Tuesday.

Geoff Rankin, chief executive of ALH, said the board recommended the Newbridge bid to shareholders ?in the absence of a superior offer?.

Analysts said Woolworths would seriously consider raising its bid as an acquisition of ALH would cement its position as the country?s biggest seller of take-home alcohol.

However, they added the emergence of Newbridge as a potential buyer lessened the competitive threat for Woolworths following months of speculation that arch-rival Coles Myer might bid for ALH.

Industry experts said Woolworths and Coles would be among the potential buyers for ALH if Newbridge, which usually sold businesses two or three years after their purchase, decided to dispose of the business.

Under the deal with Mr Mathieson, a prominent investor in the pub sector, Woolworths would take over ALH?s retail business while Mr Mathieson would run its pub and gaming business.

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