Entertainment retailer HMV Group has confirmed it is in talks to buy Ottakar's, raising the prospect of a bidding war for the UK bookstore chain.
HMV has recently moved into the download market
HMV, which already owns bookseller Waterstones, said it was "in preliminary discussions ... which may or may not lead to an offer".
Ottakar's said last week that it was discussing a possible management buyout - backed by private equity investors.
Shares in Ottakar's jumped 5.54% to 362 pence on news of HMV's interest.
Meanwhile, shares in HMV edged 0.75p ahead to 250 pence in late morning trade.
Potter magic disappears
Last month, Ottakar's warned same-store sales dropped 6.7% in the 4 weeks to 16 July - blaming the Harry Potter phenomenon for the drop.
The group said that customers had opted for reduced price copies of Harry Potter and the Half Blood Prince available at supermarkets such as Tesco and Sainsbury's.
It also said the release had prompted many publishers to delay the launch of new titles as they feared harsh competition from the children's book.
The announcement contrasted with upbeat results from Ottakar's in February, covering the year to 30 January, when like-for-like sales rose 3.5% and pre-tax profits jumped almost 16% to £7.1m ($12.8m).
HMV's fortunes have been on the up, with the company diversifying from its once-popular CD sales.
DVD sales are helping to offset a global downturn in music sales and the group has also moved into the download market as more music lovers take their tunes from the internet.
In June, the firm revealed that like-for-like sales for the year to the end of April had risen 1.1% to £1.8bn, while pre-tax profits had surged almost 10% to £136.2m.