Merger speculation lifts GUS

Almost pounds 200m was added to the stock market value of Great Universal Stores yesterday as board changes at Britain's largest mail-order company triggered speculation that it was poised to merge with the retailing house Next, writes Nigel Cope.

Sparking the excitement was the announcement that Lord Wolfson of Marylebone, who is 68, will step down as chairman of GUS next summer and be succeeded by his cousin, Lord Wolfson of Sunningdale, who is currently chairman of Next.

GUS's deputy chairman, Richard Pugh, moved swiftly to dampen merger hopes. He said last night: "We have no present interest in any merger. I can't see a great advantage in it."

GUS shares closed 18p higher at 632p. Next rose 5p to 449p.

Lord Wolfson of Sunningdale's appointment was welcomed in the City, which has become frustrated by the lack of openness and caution at GUS. One analyst said: "It is brilliant news. The mail order business needs to be modernised and it is good that they have got someone who has a history of turning things round."

With the chief executive, David Jones, Lord Wolfson has overseen a dramatic revival at Next, on the brink of collapse a few years ago. It is now one of the best-performing retailers.

He will become deputy chairman of GUS next April and chairman in September. He will stay on the Next board as non-executive chairman.

GUS announced healthy profits yesterday, boosted by a good performance from Burberry. Pre-tax profits for the six months to September were up 5 per cent to pounds 237m. Sales were up slightly at pounds 1.2bn.