Retailer Mothercare has acknowledged that it is in talks with the Early Learning Centre (ELC) over a possible £85 million takeover.
The mother and baby chain says that discussions with ELC owner Chelsea Stores are ongoing.
Responding to press reports this morning, a statement from Mothercare said: "Mothercare notes the press speculation today regarding a possible acquisition of Chelsea Stores, owner of the Early Learning Centre.
"It confirms it is in discussions about a possible acquisition of the company for consideration of £85 million, payable in cash and shares.
"A further announcement will be made in due course," the statement concluded.
A union between Mothercare and the ELC, which specialises in educational toys, would see two of Britain's most recognisable children's retailers link up.
Mothercare has more than 230 stores in the UK and in recent years has sought to turn its business around after reporting losses of £24.8 million in 2003.
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