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Last Updated: Tuesday, 27 May, 2003, 16:51 GMT 17:51 UK
GUS sells catalogue business
Retail and business services group GUS has sold its home shopping business for 590m ($969m) to the wealthy Barclay brothers.

GUS is selling the business - which includes mail order catalogues such as Kays and Great Universal - in order to cut its debt levels.

The Barclay brothers bought the Littlewoods mail order chain last year and plan to merge it with the business it is buying from GUS.

The move will need to be cleared by UK competition authorities.

City investors welcomed the news, marking GUS shares 5.6% higher to 628p by the close. That made GUS the day's biggest gainer on the FTSE 100 index of leading shares.

New focus

In addition to the home shopping business, Manchester-based GUS is also selling its Reality logistics and customer care business to the Barclays' March UK company.

We are seeking urgent talks with both Reality and Littlewoods to find out more about the proposed deal and the implications for jobs
Sir Bill Connor, Usdaw shopworkers' union
It will receive about 450m on completion of the deal, with another 140m following in May 2006.

GUS said it would use the money to pay down debts.

"Since 2000, we have been streamlining GUS to focus on fewer businesses which operate in growth markets," said chief executive John Pearce.

"The sale of our home shopping and Reality operations is a natural evolution of this process and marks a further step in the transformation of the group."

Competition question

The Barclay brothers - who are thought to be among the richest people in Britain - bought Littlewoods last year for 750m.

When the Liverpool-based Littlewoods business attempted to buy the Freemans catalogue business in 1997, it was blocked by UK regulators.

But Littlewoods said it was confident the latest deal would be approved as the agency home shopping market has been losing market share.

"Whilst we are sensitive to the needs for the competition authorities to look at the transaction we believe we have a strong case... the world has changed a great deal since 1997," Littlewoods chairman David Simons said.

Mr Simons said the combined business would have an "insignificant" share of the overall UK non-food market of less than 3%.

Littlewoods runs two catalogues while GUS has six. The Argos Additions clothing catalogue will continue after the merger but will be renamed Additions.

Job fears

The businesses being sold by GUS employ nearly 17,500 people, and unions said they were worried that jobs could be cut.

"Our primary concern is job security for our 6,000 members at Reality," said Sir Bill Connor, general secretary of the shopworkers' union Usdaw.

"We are seeking urgent talks with both Reality and Littlewoods to find out more about the proposed deal and the implications for jobs."

GUS snaps up Homebase
21 Nov 02  |  Business
Sales grow at retail giant
15 Oct 02  |  Business

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