WH Smith linked with bid for Menzies

RIVAL BIDDERS including WH Smith are thought to have entered the fray for the retail business of John Menzies which was put up for sale in January. Alchemy, the venture capital group, was front runner to buy the chain in a deal worth around pounds 55m. However, it is understood that the sale has been delayed by two rival suitors which have come in with higher offers.

There was speculation yesterday that the other bidders could include WH Smith as well as retailers from continental Europe. Forbouys and T&S Stores may also be interested.

WH Smith would not comment on any possible interest in John Menzies saying it was simply "market rumour". However, the deal would make sense as Smiths is Menzies' main rival and is selling off several businesses to concentrate on its core high street chain and its news distribution operation.

miths will announce today the sale of its The Wall music stores in the US to American group Camelot for pounds 28m. Last week it agreed to sell its Waterstone's books business to a consortium headed by Tim Waterstone for pounds 300m. It also intends to sell its stake in Virgin Our Price, the music retailer.

The purchase of the 232 John Menzies stores would strengthen Smiths' position on the high street and increase its market share in its preferred markets such as books and stationery. It could achieve cost savings via the closure of the group's head office and synergies through greater buying power.

However, such a deal might run into competition problems because of the powerful positions of the two retailers in the newspaper and magazines markets. Though Smiths is keen to expand in these sectors, the competition authorities may regard a Smiths-Menzies deal as restricting consumer choice. If Smiths bought Menzies it would also be the dominant player in railway stations and airports.