Daisytek is in discussions with the board of directors from U.K. supplies distributor ISA, said Daisytek executives.
No agreement currently exists between the two companies, and Daisytek executives warned that either party could walk away from discussions.
Daisytek is making a cash offer valued at about 11 cents per ordinary share ,or nearly $6.5 million for 59 million shares,and an alternative offer of Daisytek stock that values ISA at about 14.4 cents per share.
Daisytek has been considering the acquisition since it purchased $11.6 million in ISA convertible preference shares in September.
"Our interest in Europe is in keeping with Daisytek's strategy to continue expansion into new markets outside the United States to help us achieve our goal of being the world's leading distributor of computer supplies, office products and accessories," said Jim Powell, Daisytek's CEO, in a statement.
Daisytek executives said ISA, Bradford, England, is one of the largest publicly listed pan-European distributors of computer supplies. The company has distribution centers in Ireland, Germany, France, Norway and Sweden. ISA also owns 47 percent of Kingfield Heath, a privately held U.K.-based wholesaler of office products.
ISA reported more than $500 million in revenue in 2001, as well as an additional $285 million in revenue from Kingfield Heath.
The company said Daisytek's investment in September provided "needed cash and gave management freedom to pursue completion of several projects that have improved its operational and financial performance."
Daisytek distributes more than 17,000 name-brand computer and office supplies products and more than 2,800 professional tape products from various manufacturers. The company sells its products and services in the United States, Canada, Australia, Mexico and South America.