Sports Direct today dropped plans to make a takeover offer for Blacks Leisure amid concerns that suppliers would pull their goods out of the outdoor firm's stores if the deal went ahead.
Mike Ashley's sportswear firm, which is Blacks' biggest shareholder, said it had considered increasing its £26 million offer for the firm but its bid plans were scuppered by a lack of information about suppliers' willingness to deal with a Sports Direct-owned Blacks.
It said it had asked Blacks for details of any expressions of intent from suppliers, but the firm had "neither provided this information nor denied its existence".
"Without clarification in relation to this issue, Sports Direct has been unable to finalise its views on the value of any potential offer," the firm said.
"Accordingly, Sports Direct has determined that it would not be in its shareholders' interests to make an offer for Blacks at this time."
Recent reports have suggested there were fears among some suppliers - including North Face - over Mr Ashley's reputation as a heavy discounter.
Blacks rebuffed the initial bid from the Newcastle United owner two weeks ago, branding it "wholly inadequate".
The firm has been the subject of unwanted attention by the Sports World parent firm since it snapped up a 28.5% stake last month.
On taking the shareholding, Sports Direct vowed to stop its rival raising around £20 million from shareholders for its enlargement plans.
Blacks, which hopes to fund 35 new stores through the move, has said it still hopes to raise the money from investors, side-stepping Sports Direct's opposition by restructuring the vote in a way that only requires a simple majority of shareholders.
Today Sports Direct said it was determined to maintain its stake at the current level - indicating it could participate in a future fundraising if the alternative would be a dilution of its holding.
Blacks has suffered a difficult past couple of years, leading to a restructuring and the closure of 87 loss-making stores in the fourth quarter of 2009 after securing a rescue deal with its landlords.
But the firm has seen improved trading and now wants to refurbish its core estate and reopen shops in areas where it closed stores that it felt were subject to high rents and therefore loss-making despite strong sales.
The chain, which has more than 300 Blacks, Millets and Freespirit stores, employs about 5,500 staff in outlets and at its head office and distribution centre in Northamptonshire.Reuse content