British sporting goods company Sports Direct International Plc is in talks to bid for Eastern Outfitters LLC, the parent of U.S. discount chain Bob's Stores and outdoor retailer Eastern Mountain Sports, people familiar with the matter said.
Sports Direct, Britain's largest sporting goods retailer with about 700 stores in that country and continental Europe, has been looking for ways to expand in the United States. Last year, it bid for the intellectual property of bankrupt retailer Sports Authority, but lost to Dick's Sporting Goods Inc.
Sports Direct is in talks with Eastern Outfitters about it becoming a stalking horse bidder in a bankruptcy auction for the company, the people said on Wednesday. A stalking horse bid would set the price floor for more bids in the auction.
Meriden, Connecticut-based Eastern Outfitters has hired law firm Cole Schotz PC to prepare for a Chapter 11 bankruptcy filing that is expected in the coming days, the people said.
Together, Bob's and Eastern Mountain Sports have a total of close to 90 stores in the United States. Sports Direct has expressed interest in preserving at least some of them, the people said.
The sources asked not to be identified because the negotiations are confidential. Eastern Outfitters, Cole Schotz and Sports Direct did not immediately return requests for comment.
Private equity firm Versa Capital Management LLC is the owner of Eastern Outfitters.
The U.S. sporting goods sector is being tested by the advent of internet shopping and discount chains. Sports Authority, specialty golf retailer Golfsmith International Holdings Inc and sporting goods manufacturer Performance Sports Group Ltd are among the companies that filed for bankruptcy in 2016.
Sports Direct brands' include boxing-inspired line Everlast and fitness label LA Gear.
The planned bankruptcy filing for Bob's and Eastern Mountain Sports would be the second in less than a year.
Last April, Vestis Retail Group LLC, the former holding company for Bob's, Eastern Mountain Sports and a now-defunct chain called Sports Chalet, filed for bankruptcy. Versa acquired Bob's and Eastern Mountain Sports through the bankruptcy last year, and said at the time that Eastern Outfitters had more than $400 million in annual revenue. Vestis was also indirectly owned by Versa.
Bob's Stores was formerly owned by the TJX Companies Inc.
(Reporting by Jessica DiNapoli; Editing by Chris Reese)