Sports chain scuppers Blacks ballot move

Blacks adjourned yesterday's planned shareholder ballot on the 20m fundraising after its rival bought up 28.5 per cent of its shares earlier this week and vowed to vote down the proposals.

The meeting will be put on hold indefinitely as Blacks negotiates with the Sports World chain owner and seven days' notice will be given for a new date after the discussions conclude.

Sports Direct's aggressive moves have provoked speculation that the firm is planning a bid for its high street rival.

The firm, which is controlled by Newcastle United owner

Mr Ashley, has not given a reason for wanting to torpedo

the fundraising, which Blacks has described as the "crucial growth phase" of its recovery after a deal with landlords in November helped to secure its future.

Blacks, which operates its own brand shops as well as the Millets chain, was planning to use the funds on up to 35 new stores and the refurbishment of existing sites.

The retailer needs 75 per cent shareholder approval to go ahead with the fundraising, so the size of the Sports Direct stake would wreck the plan.

Blacks said it was engaged in talks with Sports Direct but

warned: "There can be no guarantee that these discussions will reach a successful conclusion."

Sports Direct has now effectively paid for the shares twice after its Sportsdirect.com retail business bought the Blacks stake and an 11 per cent holding in JD Sports Fashion from Ernst & Young, the administrator of collapsed bank Kaupthing Singer & Friedlander this week.

It has been locked in a dispute with E&Y over ownership of the holdings since October 2008 and the litigation on the issue is set to continue despite the acquisition.

Sportswear firms in the UK have a habit of buying strategic stakes in their rivals, but Sports Direct is known as one of the industry's most prolific share owners.

The firm suffered a 53.1m write-down on the assets held in Blacks and JD Sports last July after Kaupthing, its Icelandic banking partner that had partly funded the holdings, went into administration.

At the time it said that while it still considered itself the holder of the stakes, it had concluded that it "may not 'control' the shares for accounting purposes".

The firm later also sold off a 4.8 per cent per cent holding in another rival, JJB Sports.