Gareth Lloyd-Jones, chief executive of Madisons Coffee, said yesterday that he would be prepared to discuss a merger to help end the ferocious competition in the High Street coffee bar market "if the right valuation could be achieved."

Speaking as the company unveiled its full-year results, Lloyd-Jones said: "Coffee bar operators need to talk to each other and resolve the issue of having so many competitors. There is no simple solution but opportunities exist."

However, he said, Madisons was not holding talks with any competitor at present.

Madisons said it was "in touch" with Starbucks, the largest coffee bar chain in the UK, to whom it sold eight outlets during the year, and it did not rule out selling its remaining 30 coffee bars to the American company "at some point in the future". However, it said, said it was not currently holding merger or takeover talks with the Seattle-based group.