HMV could be merged with Game Digital as Mike Ashley looks to add another High Street chain to his growing retail empire.

The Sports Direct founder has made a bid for the beleaguered music retailer, which fell into administration just days after Christmas.

Speculation is mounting that Ashley wants to merge HMV with video game company Game Digital, in which he has a 25.4 per cent stake.

HMV has 125 shops and 2,025 staff in the UK.

The 54-year-old, who owns Newcastle United, has already bought Evans Cycles and House of Fraser in cut-price deals within the past six months.

He has suggested merging House of Fraser with Debenhams, in which has a 29.7 per cent stake.

He also owns Agent Provocateur and a 27 per cent stake in fashion chain French Connection.

But experts have warned that Ashley is 'swimming against the tide' as the High Street fights for survival in the face of crippling business rates and an onslaught from online rivals such as Amazon.

Referring to Ashley's High Street interests, Russ Mould, investment director at AJ Bell, said: 'It's a bit of a rag, tag and bobtail collection if you're being rude about it.

'People will be thinking he's throwing good money after bad.

'He clearly thinks there's some value in these businesses but he's definitely swimming against the tide at the moment.'

Richard Hyman, a leading retail analyst, suggested Ashley's interest in HMV is likely to be limited.

He said: 'I think that it's about the name.'

Hyman said merging HMV and Game was unlikely to be a success.

The latter made a loss of £7.4m last year.

'If you put two unviable businesses together, you just get a bigger unviable business,' Hyman said. 'They are both businesses whose revenue line is compromised, as is Debenhams and House of Fraser.
Buying a bunch of these businesses and stripping costs out still leaves the fundamental question unanswered: can you drive the sales in these firms?'

Ashley's interest in HMV comes as a slump in sales at House of Fraser suggested his plan to turn the department store into the 'Harrods of the High Street' was falling flat.

Kantar Worldpanel data revealed sales fell 60 per cent in the run-up to Christmas, its first festive period under the ownership of Sports Direct.

The figures, covering the 12 weeks to December 18, echo Ashley's warnings that November had been 'unbelievably bad' for the High Street, with retailers being 'smashed to pieces'.
Retailers suffered their worst Christmas in a decade.

A total of 175,050 jobs are expected to disappear from the High Street this year as a combination of fierce online competition, crippling business rates and soaring rates is predicted to force more than 23,000 shops to shut.