GUS admits to receiving offers, but sticks to demerger plan

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The Independent Online

GUS admitted yesterday that it has been wooed by a number of potential bidders.

But is sticking to its plans to demerge its retail and financial services arms.

After months of speculation that private equity groups from KKR to Bain Capital have run their slide rules over GUS, the group said yesterday it had rejected several "expressions of interest" for each of Argos Retail Group and Experian.

It is understood that at least one would-be suitor is a rival retailer although most of the interest has come from private equity groups. CVC Capital Partners, Permira and Thomas H Lee have all been linked to GUS in recent weeks.

GUS broke its silence after its directors met for one of the company's regular board meetings. As recently as May, John Peace, the chief executive, had brushed aside the prospect of a bidder emerging to derail the conglomerate's plans to do the splits.

The company said: "The Board of GUS has considered the merits of these approaches and has concluded that shareholder interests are better served by proceeding with the previously announced demerger of Argos Retail Group and Experian." The demerger is set for October.

Shares in GUS closed 29p higher at 995p after earlier hitting 1020p in some of the heaviest trading of the day. In all, 22.5 million shares changed hands as banking sources speculated that GUS was attempting to flush out a higher offer from one of the prospective bidders.

Mr Peace has previously said he favoured the demerger route because it offered better potential value for shareholders.

Philip Dorgan, the retail analyst at Panmure Gordon, said: "GUS probably can't sell Argos or Experian to private equity because shareholders will want to see the value realised in the market."

Splitting up Experian from Argos Retail Group, which owns the home improvement chain Homebase as well as the eponymous catalogue chain, will end GUS's days as a conglomerate. Shares in the group have always suffered from a traditional conglomerate discount, which Mr Peace is keen to end. Analysts' sum-of-the-parts valuation for GUS are as much as 1250p.

Valuations for Experian top £6bn, while Argos Retail Group is worth at least £3bn, analysts estimate.

GUS, formerly known as Great Universal Stores, started life as a mail order group in 1900. In the past six years, Mr Peace has sold at least 10 divisions, including spinning off the luxury goods retailer Burberry and retailing interests in South Africa.

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