For some time now the sports retailer JJB Sports, has struggled. Its share price has fallen by over 80 per cent valuing the company around £30 million. Back in 2009 it announced that a profit of £11 million for the financial year covering 2008 had plunged to a loss of £189 million for the financial year covering 2009. Since that time it has flirted with administration and sales have continued to fall. Its like-for-like sales in the five weeks to January 23rd fell by over 11 per cent. It also faces a number of other problems including meeting debt obligations, attempting to raise £31.5 million from shareholders to avoid defaulting on its debt, paying a £445 000 fine levied by the Financial Services Authority (FSA) for breaches of regulations regarding acquisitions it made in 2007-08 and dealing with an investigation into alleged collusive activity. This latter investigation has now been closed with no charges brought against JJB.

Given the catalogue of problems it is facing it is not surprising that it seems open to the possibility of a merger. Earlier this week, it was announced that preliminary talks had been started between JJB Sports and JD Sports on the prospect of a merger between the two companies. It is reported that whilst they both sell sports related clothing and products, each targets a different part of the sports retailing market and so synergies could result.

Representatives of both companies have said that the talks are at a very early stage. In a statement on its corporate web site, JJB said: "...JJB Sports plc confirms that it is in initial discussions with JD Sports Fashion plc in relation to a potential offer. The highly preliminary nature of these discussions is such that there can be no certainty that any offer will be made or as to the terms of any offer."