Woolies gives Green the brush-off

RETAILER Woolworths has confirmed it held merger talks with Philip Green's Bhs - but said it had ditched the plan. Takeover speculation has lifted Woolies' shares 21% since Wednesday, to 52p in early trade, valuing the business at more than £700m. News that it had abandoned the talks pushed the stock back 3 1/2p to 45p.

The group said it had held 'exploratory discussions' with Green, to 'examine the benefits' of a closer relationship between the pair, including the possibility of a merger.

But, 'After due consideration of the potential benefits of a merger, the board does not believe that such a merger, with its attendant risks and uncertainties, would be in the best interests of shareholders,' the firm added. Woolies said implementing its recovery plan was its top priority.

By Green's estimates, his privately-owned Bhs is worth about £1.3bn. Green has said he would never run a public company again. But last month Bhs published its full-year figures, which was seen as a strange move for a private company.

Talks were initiated by Green, who several weeks ago invited Woolworths' chairman Gerald Corbett, the former Railtrack chief, out to lunch. The talks rumbled on but eventually terminated on Thursday.

The discussions follow a tough time for Woolworths, which was demerged from B&Q-to-Comet group Kingfisher last August. Earlier this year it reported full-year figures showing it had crashed into the red. A costly stock clearing programme and poor trading at Christmas hit the group in the months after its demerger from Kingfisher. Corbett said at the time the group was confident of delivering a recovery in profitability.