The University of Derby is planning a full takeover of a local further education college.
Derby is at the due diligence stage in the acquisition of South East Derbyshire College. The move is one that John Coyne, the vice-chancellor, said could become more common as universities seek a market niche.
Derby and neighbouring High Peak College became the UK's first fully merged higher and further education institution in 1998. Since then, many universities have entered into formal partnerships with colleges, but few have merged.
Professor Coyne said: "Differentiation is the order of the day. Every university is trying to find a niche to occupy ... Our role will be as a deeply rooted local and provincial university."
Through its Buxton campus, Derby already provides further education courses, which account for £8 million of the university's £100 million turnover. South East Derbyshire College's turnover is £12 million.
Professor Coyne said that as the university's further education provision was "very modest", he wanted "larger critical mass" to provide economies of scale and to improve the university's influence with the new National Skills Agency.
The university's experience of the High Peak takeover also suggests that acquisition has a greater effect on progression from further to higher education than mere association or alignment. High Peak College became Derby's Buxton campus, which has faculty status within the university. Students from the further education side are guaranteed progression into the school if they achieve the required grades.
Derby's main aim is to improve poor post-16 attainment and progression to higher education in a region serving small market towns.
John Boardman of law firm Eversheds said: "Mergers are rare in England - Derby is unusual. What's more common is for the higher and further education institutions to remain as separate legal entities but come within the same group structure."
Leeds Metropolitan University merged with Harrogate College in 1998 but announced de-merger plans in April this year. Harrogate will now transfer to Hull College.
Van Gore, vice-chancellor of Southampton Solent University, said Derby was making "a bold and imaginative move that makes a great deal of sense".
He said closer collaboration between further and higher education was "on the cards because of funding pressures, employer engagement, the skills agenda and student progression". Mergers could bring the advantages of shared services, he said, "while fashioning a powerful instrument to address issues of deprivation, underachievement and social justice".