Woolies gives Green the brush-off

HIGH STREET chain Woolworths has called off £2bn merger talks with fellow retailer Bhs. The proposed deal would have left Philip Green, 95% owner of Bhs, with a dominant stake in the merged business, and strengthened his status as one of Britain's most powerful retailers.

The talks were flushed out this morning when Woolworths, chaired by former Railtrack boss Gerald Corbett, was forced to put out a statement after rumours began hitting the stock market late on Thursday. The statement said 'exploratory discussions' had been held between the companies 'to examine the benefits of a closer relationship, including the possibility of a merger'. The statement added that Woolies had called off the talks because of its high level of 'risks and uncertainties'.

It is believed Corbett was concerned about a deal that would leave Green with effective control of the merged group. Green said he would have been interested in continuing the preliminary talks 'on the basis that they make only a 2% operating margin. I think we can do better'.

Investors had pushed up Woolworths shares 3p to 48 1/2p on Thursday, valuing the business at around £680m. They raced ahead again before falling back to 45 3/4p once the statement came out.

Green has estimated Bhs is worth about £1.3bn.