Shares in B&M rose sharply on Monday following weekend reports that supermarket giant Asda is mulling over a £4.4 billion takeover of the discount retailer.
Asda, owned by Walmart, is exploring a bid for the firm amid a flurry of consolidation in the supermarket sector, according to the Sunday Times.
B&M shares were up nearly 5% to 357p in morning trading on Monday.
The chain is owned by the billionaire Arora brothers, who have built it into a retail giant since taking control of the firm in 2004.
Acquiring the retailer would give Asda access to a network of high street shops through which to distribute its products, including the George clothing range.
Analyst Clive Black said: “B&M would bring great capability in general merchandise value retailing for Asda, with its strong range, authority, pricing and space growth, whilst providing George, Asda’s excellent apparel brand, the scope for space growth in largely complementary locations. B&M is also increasingly effective in grocery, we should add.
“Cost synergies would be potentially evident in central overheads, sourcing and logistics.”
A deal would also release pressure on Asda’s core supermarket business, which has seen years of sales declines as its competitors have stolen a march on it.