Card Factory is considering placing a bid for upmarket rival Paperchase, which was put up for sale in October with a £150m asking price.
Paperchase owner Primary Capital hired PwC and Financo last year in order to find a buyer for the company.
It is understood Primary Capital wanted to await the results of Christmas trading before approaching potential buyers, according to The Telegraph.
Paperchase reported a strong Christmas with like-for-likes up 3.1% in the five weeks to December 27. Total sales increased 6.5% to £28.4m, while online sales jumped 26%.
Yorkshire-based Card Factory manufactures its own cards and is positioned more towards the budget end of the market, as opposed to Paperchase’s premium positioning.
Paperchase chief executive Timothy Melgund plans to retain a stake in the retailer following a sale and hopes to stay on as boss if needed by the new owner.
Card Factory, which floated on the stock exchange last year, reported a like-for-like sales increase of 1.8% over the 11 months ending December 31 and says it achieved “solid” Christmas trading.
Paperchase claims to have received interest from a number of parties since being put up for sale, including a mixture of strategic and trade investors.