JD Sports is in initial talks with JJB Sports about a buyout.
Both parties confirmed the highly preliminary nature of the discussions, with JJB saying there can be no certainty that any offer will be made, or the terms of the offer.
IF JD does purchase JJB it will create a 750-store retail giant.
JJB is currently valued at around £30 million, and the acquisition news comes at a time when the retailer is looking to raise £31.5 million from key shareholders to plug a hole in its finances.
Mike Ashley, owner of rival Sports Direct, owns a 12 per cent stake in JJB, while JD is 57 per cent owned by the Pentland Group, which owns brands such as Berghaus, Ellesse, Kickers UK, Mitre and Speedo.
Both retailers have been in the news lately – highlighting their differing fortunes.
JD recently purchased loss-making Irish retail chain Champion Sports, while at the end of January JJB was fined £455,000 by the Financial Services Authority for failing to disclose information to the market about the true cost of two acquisitions.
