The retail group GUS is splitting itself in two in a process that may lead to bids for Experian, the financial services arm.
The company behind the DIY chain Homebase is finally breaking up, six years after first announcing plans to do so.
The Argos Retail Group and Experian will have separate share listings on the London Stock Exchange, with a combined value of about £11bn. They will both be in the FTSE 100.
GUS plans to raise between £500m and £1bn for Experian from a new share issue, a move that raised eyebrows in the City. Richard Ratner, at Seymour Pierce, said: "It is a little surprising Experian is raising money but not a major concern." Experian, the credit check agency, will probably use the cash to pay down debt.
GUS recently turned down a £7bn bid for Experian from US private-equity houses but seems open to a sale on the right terms.
GUS's chief executive John Peace said: "If someone wants to come along and offer a compelling price, that's something the board would have a duty to look at."
GUS has had several informal approaches for Experian, none of which have led to a takeover deal. Insiders say that given its double-digit growth in the past few years any bidder would have to pay top price, though they concede that is possible.
The split of the two businesses will come in the next six to 12 months - the final break-up of the old GUS. It demerged the fashion chain Burberry last year.
The retail arm has 650 Argos stores with sales of £4bn a year and 300 Homebase stores that have sales of £1.5bn.
The management will be unchanged, with Terry Duddy staying as the head of Argos and Don Roberts as chief executive of Experian. Sir Victor Blank will step down as chairman to concentrate on the same role at Lloyds TSB, with Mr Peace shifting to become chairman of Experian. Oliver Stocken, the former Barclays finance director, will be chairman of Argos.
Asked if Merrill Lynch and UBS bankers would get massive fees for demerging the company, Mr Peace replied: "Absolutely not." He refused to say how much he will have to pay the advisers. GUS has a small reputation in the City as one of the less generous sponsors of investment banks.
Speculation that GUS was plotting a secondary listing for Experian on Wall Street was knocked flat. It had been ruled out because some shareholders, such as UK tracker funds, would automatically have to sell if GUS listed in the US.
GUS, a major name in British retailing since 1931, will disappear once the split is completed. It is expected that Experian will be valued by at about £7bn with Argos worth about £4bn. The shares closed down 36p at £10.70.Reuse content