KNOXVILLE, Tenn. (AP) -- The bidding war for Goody's Family Clothing Inc. escalated Monday with an announcement by the retailer's directors that they have determined two New York investment firms have made a superior buyout proposal.

Prentice Capital Management and GMM Capital have made an all cash offer of $8.85 a share, or about $302 million, for the Knoxville-based clothing chain. The offer would exceed an $8-a-share bid made by Boca Raton, Fla.-based Sun Capital Partners that Goody's tentatively accepted Oct. 7, and it would match a competing proposal received a week ago from an unnamed third party.

The bidding war already has prompted three shareholder lawsuits that the Sun Capital bid undervalued the company, while Goody's said it remained open to additional offers.

Shares in Goody's, which operates 371 stores mostly in the South and Midwest, closed at $9.07, up 25 cents or nearly 2.8 percent, in trading Monday on the Nasdaq Stock Market.

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