One day before Russia's first public takeover bid was scheduled to close, the buyers acknowledged that they had failed to attract enough shares to take control of the Red October chocolate factory and were considering extending their offer.


Yury Milner, general director of Alliance-Menatep, which is conducting the offer on behalf of the giant frozen foods producer AO Koloss, said he had verbal commitments from various shareholders to sell him 20 percent of Red October's shares.


That falls far short, however, of the 51 percent that Koloss would have to purchase in order to take control of Red October.


On Monday, Alliance-Menatep announced that it might extend the offer and would consider adding guarantees to the factory's workers and management to preserve their jobs and continue social programs in order to sweeten the deal.


"We are ready to sign a memorandum [of guarantee] with the administration and board of directors," Milner said.


The decision on whether to prolong the tender would be taken within three days of the original offer's expiration on July 25, Milner went on to say, adding that, "The decision will depend on the results of our negotiations with Red October's board of directors."


Alliance-Menatep, an investment arm of the powerful bank Menatep, initially offered $7.50 per share on July 11, when the market price for the shares was around $5.80.


But Red October's management fought back, telling their workers and shareholders not to sell because the price was far too low. In response, Menatep raised its offer to $9.50 per share last week.


Yury Yegorov, Red October's financial director, declined to comment Monday, adding that the company would be meeting Alliance-Menatep for talks soon.


Koloss' takeover bid for Red October has been the subject of much attention within the Russian business community, because it marks the first time that any takeover has been attempted in Russia's open market, and because the factory is one of the country's best known and most successful enterprises.


Observers in the market said Monday that they believed the Menatep offer was still too low to be successful. While Red October's plant is antiquated, on the relations between Menatep and the Red October administration," Goltsov said of the bid's chances for success.


He added that the managers of Russian enterprises are reluctant to give up control of their firms and that it is a difficult and protracted business to buy 51 percent of a major company here.


"You can buy a gas station, not a big company like Red October," Goltsov said.


Last week, in an effort to ensure that they did not lose control of the factory in a hostile bid, Red October's board of directors announced that they would compensate shareholders who did not sell their shares in the event that an outside investor acquired more than 40 percent of the company's stock without the previous approval of the board.


The announcement issued by the board of directors also said Red October would buy shares from the company's management "at a price that exceeds AO Koloss' offer" in case Koloss bought 51 percent without agreement from the factory's board of directors.


Rufat Askerov, chief expert with UniTrust brokerage, said Koloss was likely to find the workers' collective hard to persuade.


"From my experience of working with workers' collectives, I know that they are usually happy when you offer them a higher price but then wait for better offers," he said.


Alliance-Menatep also faces legal hurdles ahead.


Under current Russian law, the company would have to obtain a approval from the State Antitrust Committee in order to purchase more than 20 percent of Red October, said Alexander Pankratov, a lawyer with White & Case.


"The key question now is whether the Antitrust Committee approves of the deal or not," he said. "If there is no approval, there is no deal."


Alliance-Menatep announced earlier that it had filed a request to the State Antitrust Committee after its July 11 tender announcement.


By law, the committee must answer the company within a month of a request being filed.


But Pankratov said Alliance-Menatep had submitted the request too late.


"The approval is be received beforehand, not when people are already offering their shares," he said.