Setback for sale of Freemans

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The Independent Online
Sears, the struggling retail group, suffered a fresh setback yesterday when the Government agreed to extend the deadline for the Monopolies and Mergers Commission report on the proposed sale of its Freemans home shopping division to Littlewoods.

The Department of Trade and Industry said it had agreed a two-month extension following representations from the MMC about the complexity of the issues raised by the merger. A Freemans-Littlewoods link-up would give the combined company more than 25 per cent of the UK mail order market.

"In order for the MMC to be able to analyse the evidence fully and to draw sound conclusions the reporting period should be extended to 22 September," the DTI said. The report had been due next Monday. The usual time-lag between MMC reports and a DTI decision means Sears is now unlikely to know the outcome until November.

Sears shares fell 2.5p to 62.5p on the news as analysts pondered whether the DTI move might make it more likely for the pounds 367.5m deal to be blocked. The decision will delay Sears' plans to pay pounds 410m back to shareholders later this year.

"It just shows with Sears that if something can go wrong, it will," said John Richards of NatWest Securities.

A Sears spokeswoman said: "We are disappointed we can't pay the money back to shareholders on the original timetable. But this doesn't affect our confidence on the outcome."