Nike, the world's largest athletic shoe and clothing maker, is behind an acquisition approach for British sportswear firm Umbro, sources familiar with the matter said on Thursday.
Umbro, sponsor of the England soccer team, said earlier it had received an approach, sending its shares up 30 percent, but declined to name its suitor. A source familiar with the situation said talks were at an advanced stage.
Nike shares dropped 49 cents at $62.67, in Thursday afternoon trade on the New York Stock Exchange.
Shares in Umbro closed up 27.5 percent, valuing the group at around 223.4 million pounds ($457 million).
Britain's biggest sports retailer Sports Direct had been named as a likely suitor by one trader and an analyst. But Seymour Pierce analyst Andrew Wade said Sports Direct, founded by reclusive tycoon Mike Ashley, was unlikely to be behind the approach.
Wade said the list of potential suitors was long, and included Nike, Puma, Adidas and former Chief Executive Peter McGuigan, backed by private equity.
Wade said he did not believe the fundamentals supported a bid at 150 pence per share, while another analyst, who declined to be named, said 160 pence per share would be a fair price.
The England soccer team's 2-1 defeat by Russia on Wednesday, meaning they are may not reach the Euro 2008 Championship finals, sent shares in Umbro down 3.8 percent in early trade on concerns of lower demand for replica shirts.
Umbro declined to comment further on the reported approach.
Sports Direct, Adidas and Puma, which is 62 percent owned by French retailer PPR, also declined to comment.