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Sports Direct in talks to bid for Bob's, Eastern Mountain Sports -sources

(Adds details of French Connection (LSE: FCCN.L - news) stake purchase, background)

By Jessica DiNapoli

Feb 2 (Reuters) - Struggling British sportswear retailer Sports Direct is in talks to bid for Eastern Outfitters LLC, the parent of U.S. discount chain Bob (Shanghai: 601169.SS - news) 's Stores and outdoor retailer Eastern Mountain Sports, people familiar with the matter said.

The sportswear chain, founded and controlled by Chief (Taiwan OTC: 3345.TWO - news) Executive Mike Ashley, is Britain's largest sporting goods retailer with about 700 stores there and in the rest of Europe and has been looking for ways to expand in the United States.

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A regulatory filing to the London Stock Exchange (Other OTC: LDNXF - news) on Thursday also revealed that Sports Direct had taken a 11.2 percent stake in troubled UK fashion retailer French Connection, through contracts for difference.

A spokesman for Sports Direct declined to comment on its intentions in either situation.

The firm had a disastrous 2016. British lawmakers condemned it for "Victorian" working conditions, investors and media criticised its corporate governance and trading was poor with a series of profit warnings issued.

It bid for the intellectual property of bankrupt U.S. retailer Sports Authority last year, but lost out to Dick's Sporting Goods Inc.

Sports Direct is now in talks with Eastern Outfitters about becoming a stalking horse bidder in a bankruptcy auction for the company, the people familiar with the matter said on Wednesday. That would set the price floor for more bids in the auction.

Shares (Berlin: DI6.BE - news) in Sports Direct, down 24 percent over the last year, were up 1.7 percent at 303.5 pence at 1505 GMT.

Meriden, Connecticut-based Eastern Outfitters has hired law firm Cole Schotz PC to prepare for a Chapter 11 bankruptcy filing, expected in the coming days, the people said.

Together, Bob's and Eastern Mountain Sports have a total of close to 90 stores in the United States. Sports Direct has expressed interest in preserving at least some of them, according to the sources who asked not to be identified because the negotiations are confidential.

Eastern Outfitters and Cole Schotz did not immediately return requests for comment.

Eastern Outfitters is owned by private equity firm Versa Capital Management LLC, which acquired Bob's and Eastern Mountain Sports through the bankruptcy last year of the store chains' then holding company, Vestis Retail Group LLC.

Versa said at the time that Eastern Outfitters had more than $400 million in annual revenue.

The U.S. sporting goods sector is being tested by the advent of internet shopping and discount chains. Sports Authority, specialty golf retailer Golfsmith International Holdings Inc and sporting goods manufacturer Performance Sports Group Ltd are among companies that filed for bankruptcy in 2016.

Sports Direct's brands include boxing-inspired line Everlast and fitness label LA Gear. It sold the Dunlop brand to Sumitomo Rubber Industries for $137.5 million in December. (Reporting by Jessica DiNapoli, additional reporting by James Davey; Editing by Chris Reese and Adrian Croft)