JD Sports seeks to buy rival

JD Sports, the sports retailer, is in talks with Blacks Leisure to buy the group's First Sport and AV chains. Analysts said the two formats could fetch about £30m to £35m with the acquisition funded by debt.

The deal would transform the size of JD Sports. It currently has 155 UK stores that specialise in sports fashion such as trendy trainers and clothing by Nike, Adidas and Reebok. Blacks' First Sport chain has 187 stores that sell mainstream sports clothing such as replica football shirts. AV, which stands for Active Venture, has 26 stores with the emphasis on upmarket men's clothing brands such as Thomas Burberry, Timberland and Lacoste.

The Blacks sports and fashion division has been struggling in a competitive market dominated by JJB Sports. Though the division increased like-for- like sales by 7.4 per cent over Christmas, margins were lower as the group cut prices.

JD Sports would not comment on the rationale of the deal or whether it would keep the First Sports name or rebrand the stores as JD Sports.

Blacks would not comment on the reason for considering a sale. However, the group has recently been beefing up its "outdoor" business, which includes the Blacks Outdoor and Millets stores that sell camping gear and equipment for skiing, climbing and walking. Last month Blacks paid £1.7m for 47 shops previously owned by the Famous Army Stores group, which had collapsed into administration.

If the deal goes though Blacks would be left with 209 branches of Millets, 54 Blacks and 30 Free Spirit stores, which cater for sports such as surfing.

Blacks shares rose 4p to 204.5p. They stood at 549p five years ago but sank after the chief executive Simon Bentley was away from the business for an extended period after a serious skiing accident.

The deal would follow the surprise announcement by JJB Sports last Friday that it is paying £42m for TJ Hughes, the struggling discount department store retailer. JJB said it planned to address the problems at TJ Hughes and then expand the chain. However, the response in the City was to mark down JJB shares.