Shares in Hugo Boss jumped on Friday amid speculation that billionaire Mike Ashley's Frasers Group will make a swoop for the German fashion house.
The stock rose almost 7pc in Frankfurt, valuing the fashion company at €3.2bn (£2.7bn).
The rise followed a report by a German publication that the Sports Direct tycoon was considering a takeover bid for the entire firm for more than €3.2bn.
Frasers is already an investor and has been buying up more shares in Hugo Boss in recent months as it seeks to "elevate" his existing brands and sell more luxury goods.
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In January, the company behind Sports Direct, Flannels and House of Fraser, controlled a 15.2pc stake in the firm through a combination of stocks. It said at the time that it intended to be a "supportive shareholder".
The investment in Hugo Boss is the latest in a series of retail bets made by Frasers that include Mulberry and Studio Retail.
Only last month Hugo Boss shares rallied to a 12-month high after another a media report citing takeover interest from French luxury giant LVMH.
Meanwhile, Bernard Arnault, the chairman of LVMH, has spent about €440m (£378m) in recent months buying shares in the world’s largest luxury-goods maker.
He bought the stock through companies controlled by himself and his family, according to regulatory filings disclosed this week.
Frasers and Hugo Boss did not respond to requests for comment.
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