Halfords is mulling a bid for the arts and crafts retailer HobbyCraft, according to reports.

The cycling and motoring accessories specialist is keen to diversify its business and cash in on HobbyCraft’s healthy trading performance.

Halfords chief executive David Wild previously said that he would look at acquisition options that complemented the existing business. The company is said to be looking at a number of targets.

HobbyCraft is valued about £70m after Grant Thornton was appointed to come up with options for expansion late last year. The crafts specialist wants to quadruple its 45 outlets to about 180 stores, and plans to open 10 this year.

One retail analyst said: “From Halfords’ point of view, the expertise they can bring [to HobbyCraft] would be financial muscle, wide retail experience and very good knowledge of the retail park market.”

HobbyCraft is also a desirable option because its out-of-town specialist super-store model and has no serious competition.

Halfords may face competition for HobbyCraft as several private equity groups are said to be interested in the retailer’s prospects. Now debt markets are showing signs of recovery they could outbid the price Halfords would be prepared to pay.