TROUBLED floorcoverings group Gaskell plc could be facing a takeover battle after a Swedish millionaire snapped up almost 30 per cent of its shares.

Entrepreneur Peter Gyllenhammar has spent an estimated £1.3million on buying a 29 per cent stake -- right on the limit before having to make an offer for the entire operation. Gaskell -- which employs around 400 people at Rishton and Clayton-le-Moors -- came close to going out of business earlier this year before it sold its carpet tiles division and its Kidderminster factory for a total of £21million to clear mounting debts.

Mr Gyllenhammar also owns a five per cent stake in Blackburn-based Scapa plc which he acquired in April at a cost of more than £2million. It is understood he is out of the country and unavailable for comment. None of the senior management team at Gaskell was available to discuss the implications of Mr Gyllenhammar's interest in the business.

The company -- once Britain's third largest carpet manufacturer -- has been in crisis for the past three years after buying Tomkinsons Carpets in Kidderminster in an ill-fated £12 million deal. It closed its Kidderminster operations following a series of profits warnings and senior management changes.

Last week, Gaskell announced a pre-tax profit of £3.1million for the first six months of the year, but admitted this was solely because of its £21million asset sales.

Chairman Alan Chamberlain said the company was still experiencing difficult trading conditions, but he remained hopeful. "We are already gaining market share in some important segments of our business and, with various sales and cost reduction initiatives, I believe we can continue to make progress in the second half of 2003," he said.