FINDEL PLC 
Sports Direct owns 29.9 percent of Findel's equity - just under the threshold which would require it to make a formal takeover offer.
Under founder and Chief Executive Mike Ashley, Sports Direct has taken large stakes in several British retailers including computer games firm Game Digital and department store Debenhams, using the holdings as leverage to develop commercial ties.
Last Friday Sports Direct increased its stake in Debenhams to 29.7 percent and said it was seeking to extend its relationship with the firm to "a strategic partnership."
Findel said it had agreed to explore further developing commercial opportunities with Sports Direct.
The announcement follows successful pilots of Sports Direct-licensed brands on Express Gifts' Studio.co.uk website. Express Gifts is Findel's largest business.
As part of these discussions, Liam Rowley, Sports Direct's head of strategic investments will attend board meetings as an observer. Findel said Rowley's role does not constitute a seat on its board.
"We remain a supportive and long-term shareholder in Findel and see significant benefits from developing a deeper commercial agreement," said Rowley.
Findel shares were up 8 pence at 223.5 pence at 0848 GMT, valuing the business at 191.4 million pounds. Shares in Sports Direct were up 1.5 percent, valuing it at about 2 billion pounds.
(Reporting by James Davey)
