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Shares in sportswear giant Umbro closed 27.5 per cent higher yesterday after the company revealed that it had received a takeover approach.

In a statement the sponsor of the England football team said that it had "received an approach which may or may not lead to an offer being made for the entire issued share capital of Umbro".

However Umbro did not reveal the identity of its suitor, sparking speculation that its US rival Nike may be behind the approach.

Nike refused to comment on the rumours, while other reports suggested that Sports Direct could be Umbro's mystery bidder. The retailer recently upped its stake in Umbro to more than 15 per cent and has expressed its desire to buy more brands.

Umbro has said that it will make a further announcement on the offer in due course.

The takeover approach follows a difficult period for Umbro, which has struggled to maintain sales in the wake of last year's football World Cup. Last month the company issued a profit warning after poor sales of England replica shirts.

Analysts say that Umbro's performance could be hit further if the England team fail to qualify for the Euro 2008 championships, with their chances dealt a serious blow after their 2-1 defeat by Russia on Wednesday.

News of the Umbro approach comes at a time of increasing consolidation in the sportswear industry.

Since Adidas bought rival Reebok in 2005 the former has become the subject of takeover speculation.

French retailer PPR, the company behind the luxury brands Gucci and Yves Saint Laurent, has also built up a substantial stake in German sportswear company Puma.