Five-a-side football business Goals Soccer Centre has confirmed it is in preliminary talks with rival Powerleague over a possible merger that could create a major international leisure player
It said the potential tie-up was just one of a number of "strategic opportunities" being weighed up by the company's board, and that no commercial or financial terms had been agreed.
A merger between Goals and Powerleague, which between them operate roughly 100 sites, would significantly increase their UK presence, as well as bringing under one corporate umbrella their venues in Ireland (Other OTC: IRLD - news) , the Netherlands and the US.
Goals, which was loss-making in 2015, returned to profit last year, and appointed Mark Jones, a former Grosvenor Casinos executive, as its new boss.
It also raised nearly £17m from investors to pay down debt.
The company had a market capitalisation of just under £77m before details of talks surfaced.
Powerleague trades from more than 750 football pitches, and also owns Powerplay, a league operator across 240 UK venues.
In addition to football, it has a multi-sport offering including basketball, dodgeball and netball.
The company was bought by Patron Capital Partners, which focuses on buying businesses with substantial real estate assets, in 2009 in a deal which put an enterprise value on Powerleague of about £80m.
Previously listed on the London stock market, Powerleague has been expected to be put up for sale by Patron for some time.
Sahill Shan, analyst at N+1 Singer, said that while the deal makes "huge sense", it could fall foul of competition law.
He said: "Strategically and financially a tie-up would make huge sense given how competitive the five-a-side football sector has become with the resurgence of the local authority sector.
"The main risk we envisage is whether any tie-up would trigger any competition issues and how these might be addressed."