The Sports Direct discount retail chain is battling for control of the US Everlast boxing brand made famous by Muhammad Ali.
The controversial UK business, which has infuriated investors by refusing to communicate since it joined the stock market in February, said it had agreed a $30-a-share bid for Everlast, valuing the business at $135m (£67m). Including debt the deal is worth some $168m.
However, tonight the British group's bid was topped by New York-based investment firm Hidary, which offered $31.25-a-share. Hidary had previously tabled a $26.50-a-share offer.
A spokesman for Sports Direct refused to comment on the bid battle, but the offer is Sports Direct's second corporate move in three weeks as founder Mike Ashley pursues his ambition to turn the company into the world's biggest sportswear retailer.
Earlier this month the group spent £39m buying a 5% stake in Helsinki-based Amer, which controls ski brands Salomon and Atomic, together with Wilson tennis and golf equipment and the Suunto diving and sailing brand.
Sports Direct already controls a wide portfolio of sports brands including 400 Sports World Stores and brands such as Slazenger, Donnay, Dunlop and Lonsdale.
In a statement to the stock exchange the group said: "This acquisition is in line with Sports Direct's strategy of acquiring further brands whose heritage and core values are consistent with Sports Direct's existing group brands portfolio."
It added that the deal would allow Sports Direct to "launch other group brands into the US market".
Everlast traces its roots back to 1910, when it was established in New York's Bronx as a swimwear manufacturer.
The company moved into boxing in 1917 when boxer Jack Dempsey asked the company to produce some protective headgear for training.
Two years later Dempsey became world heavyweight champion.
Recently the company has diversified, moving into footwear, underwear, fitness equipment for children and heart rate monitors. The company, which reported sales of $40m and earnings of $9m in 2006, joined the Nasdaq main market earlier this year.
Sports Direct, which is advised by Credit Suisse, said it intended to finance the purchase from a credit facility.
Sports Direct shares fell 2p to a new low of 181.5p. The shares had lost ground earlier this week on concerns that the recent cold wet weather will have hit sales.
They are now down 40% from their float price of 300p at the end of February.
Jonathan Pritchard, analyst at Oriel Securities, said investors would be concerned about the potential new acquisition: "It has hardly been wall-to-wall joy so far owning Sports Direct," he said, "but the one thing that investors really feared has happened: the company is starting to venture to the States."
He described the price of the boxing specialist as "pretty punchy" and said it was a "clear statement of intent" that Sports Direct was targeting the US where so many rival UK retailers have run into trouble.
Mr Pritchard said it "remained impossible" to be confident about Sports Direct and added: "I keep thinking there'll come a time to shut your eyes and buy this, and they keep giving the market a reason to keep selling".
