The shops would almost double Greggs' presence in the high street, giving it 900 bakers and sandwich shops - far more than its nearest rival, the 280-strong Three Cooks chain owned by RHM.
AB Foods, which is in its close season ahead of a results announcement on 18 April, said it would not comment further until talks were completed. It expected to make an announcement within four weeks.
Analysts did not think the Bakers Oven shops, which at one stage formed part of 2,000 shops owned by AB Foods, were very profitable. The price of the deal would also not be greatly influenced by property considerations as only 20 per cent of the sites were freehold.
Greggs, which floated 10 years ago with a chain of 280 shops, is expected to stage a rights issue to fund the deal if it goes ahead, despite ending the year to January with cash of pounds 12.5m. During the year it raised profits 30 per cent to pounds 9m.
A rights issue would dilute the Gregg family stake of nearly 25 per cent. The shares closed unchanged at 743p while AB Foods rose 6p to 583p.Reuse content