Worcestershire car and bike parts firm Halfords is rumoured to be planning a bid for the national HobbyCraft retail chain.
Halfords has more than £80 million in cash after its dividends this year and has been looking for acquisition options.
HobbyCraft has been put up for sale after directors said they wanted to find ways to expand the company. It is expected to fetch a price of about £70 million.
But Halfords is expected to face competition from a number of private equity groups if it makes a bid.