City analysts say Blacks Leisure Group could be sold for as little as £3 a share, if investors at the struggling group want a quick exit.
Rival Sports Direct International will be allowed to bid for the outdoor business from mid August, having ruled itself out of a takeover in February.
Sports Direct owner Mike Ashley has previously expressed interest in the outdoor and boardsports market and already holds a 29.4% stake in Blacks.
KBC Peel Hunt analyst Paul Rossington said Blacks Leisure's share price was being sustained only by the prospect of a bid. He predicted that Ashley, who is executive deputy chairman and majority shareholder of Sports Direct International, could make an offer as low as £3 a share to win over Blacks' shareholders.
"At that price, investors would bite Ashley's hand off," said Rossington. As Drapers went to press, Blacks' share price was 262p.
Other analysts believed the price could be higher. Seymour Pierce vice-chairman Richard Ratner said: "Perhaps 320p would secure it for Ashley." He added that, with improving trading conditions this summer, he expected Blacks' full-year pre-tax profits to hit £5.6 million for the year to the end of February.
Speculation about Blacks' future was spurred by the departure this week of Russell Hardy, who has been chief executive since January 2005. His departure was thought to be the result of a disagreement with board members over the company's direction. The group has announced three profit warnings in the past year.
Hardy has been replaced by former finance director Keith Fleming on an interim basis. Industry sources said the risk of a bid would make the post difficult to fill.
Blacks has also announced a strategic review of its Freespirit boardwear arm, which has 49 stores. A sale of the Freespirit chain would enable Blacks to release cash. Its expected value is £40m.
Blacks Leisure will make a trading statement at its AGM on July 19, which is expected to have a major influence on Ashley's stance.
- Sports Direct is hunting for an executive board member after chairman David Richardson left last week. Non-executive director Simon Bentley is interim chairman.
BLACKS IN FIGURES
- Turnover: £298.3m for year to March 3 2007
- Pre-tax profits: £100,000
- Net borrowings at year end: £6.6m
- Fascias: Blacks, Millets, Freespirit, O'Neill. European rights to Mambo.