Fashion retailer Giordano International is understood to be in talks to buy a struggling Hong Kong-based retailer, according to a report released by brokerage ABN Amro this week. Giordano executive director Jimmy Chan Kui-tim told ABN Amro analyst Jeremy Sutch that the fashion house might spend up to $500 million on the purchase, which could lead to a share placement for funding. Mr Chan also told Mr Sutch that a number of United States firms had expressed interest in taking control of Giordano. 'Given the considerable Asian distribution network that Giordano boasts, its current low market capitalisation and its high free-float, such interest is unsurprising,' the ABN Amro report said. The report put a buy recommendation on Giordano's stock. According to the report, Giordano was in talks to buy a retailer suffering financial difficulties but holding a middle-market brand with exposure in the region. Giordano was willing to pay up to $500 million for the potential purchase, to be funded by internal resources and a short-term bridge loan. The loan would eventually be paid off by share placement proceeds. Giordano has yet to reveal the identity of its target. Mr Chan was not available to comment yesterday. Rumours suggested fashion retailer G2000 Group could be the target, but sole proprietor Michael Tien Pak-sun denied the rumours. Mr Sutch said: 'The revelation that Giordano is on the acquisition trail furnishes the stock with a speculative angle.' Giordano closed up 5 per cent yesterday, at 84 cents. Mr Sutch said Giordano was financially sound with net cash of about $200 million and strong cash flow. ABN Amro also suggested Giordano, which was forced out of Beijing and Shanghai in 1995 in shutdowns linked to criticism of the mainland government by outspoken founding shareholder Jimmy Lai Chee-ying, may be allowed to return. Mr Sutch said 'numerous' mainland parties had offered to join forces with Giordano to re-establish outlets in the two cities, but the company found the parties unsuitable either politically, or in terms of retail expertise.