Nike, the $32 billion American sports-wear giant, is believed to be close to launching a bid for Umbro, the official England football kit maker.

Umbro shares soared 27.5 per cent yesterday, valuing the company at £220 million as it revealed that it had received an approach from an unnamed suitor. Despite fervent speculation of a move by Mike Ashley, the Sports Direct billionaire who has built a 15.04 per cent stake in Umbro over the past two months, sources close to the deal ruled out the tycoon and said Nike was the interested party. Sources insisted that the two sides had been in discussions for some time and details of a preliminary offer could be announced “in days rather than weeks”.

Nike refused to comment and Umbro issued a statement saying: “The board of Umbro confirms that it has received an approach which may or may not lead to an offer being made for the entire issued share capital of Umbro.”

News of the approach came less than 24 hours after Umbro-sponsored England’s chances of qualifying for the Euro 2008 football championships were dealt a serious blow after defeat by Nike-sponsored Russia.

Analysts believe that Umbro’s profits could fall by more than 40 per cent next year if England fail to qualify for the tournament. Last month Umbro issued a profit warning after poor sales of England replica tops, in part fuelled by the dismal form shown by Steve McClaren’s team.

John Stevenson, an analyst at Shore Capital, said the timing of the approach was “surprising” given that a wave of profit downgrades could be coming over the next month. However, Nike has been aggressively expanding into the football market in the past few years and industry sources said a buyout of Umbro, which has a respected heritage in football, would help its aim of dominating the sport.

A takeover by Nike would give the American firm a huge presence in the Premiership, where it already supplies kit to Arsenal and Manchester United, among others. Umbro supplies six Premiership teams, including Birmingham and West Ham. Nike also sponsors leading international teams including Juventus and Barcelona.

Sports Direct had been widely tipped to make an offer for Umbro and banking sources did not rule out a rival bid. However, industry sources said it was unlikely that Sports Direct would challenge Nike’s bid, although Mr Ashley’s stake would give him a strong bargaining position. Sports Direct stocks both Umbro and Nike brands. Mr Ashley will also have made Sports Direct an estimated £6 million in profit on his Umbro shares, which closed up 33p at 153p last night.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts