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Friday, 21 January, 2000, 08:45 GMT
Metro denies Kingfisher talks

Woolworths is owned by Kingfisher Woolworths is one of Kingfisher's best known names in the UK

German hypermarket-to-restaurants giant Metro has denied reports it is in merger talks with the UK retail group Kingfisher.

"There is nothing to it," Metro spokesman Martin Rassfeld said. "You can take that as a denial."

A marriage of the two would create a continent-wide chain worth about 15.7bn (25 billion euros), and include such names as Woolworths and B&Q.

It would also provide a lift for two companies whose share prices have fallen more than a third in the past year.

They have been hit by rivals merging and the arrival of much larger US rival Wal-Mart in Europe.

The report suggesting that the two sides were talking came in the UK's Financial Times newspaper on Friday.

The report quoted people close to the discussions saying senior executives had met for talks aimed at a merger.

On Thursday Metro shares surged on rumours it was seeking a deal with US retail giant Wal-Mart, which last year beat Kingfisher in a battle to take control of UK supermarket chain Asda.

Both shares sluggish

A stumbling block for the merger could be Metro's ownership.

Metro Holding effectively runs the German retail group, with Metro founder Otto Beisheim, the Haniel group and the Schmidt-Ruthebeck family in charge of its destiny through a complex structure of holding companies.

On Thursday a spokeswoman for Haniel said she had no official knowledge of any plans to sell, adding that any such decision would require the agreement of all three major shareholders.

"We remain loyal to our involvement with Metro," she said.

Metro shares have plunged 44% since reaching a 52 week high of 73.6 euros last February. On Thursday its shares closed up 7.9% at 44.49 euros.

Kingfisher closed up 1.2% at 518p on Thursday after chief executive Geoff Mulcahy said global sourcing could cut costs by 290 million euros a year by 2004.

But that still leaves the stock well below its high point of 930p reached in May.

Kingfisher already has a strong position in continental Europe, achieving 40% of its sales oputside the UK.

It employs 115,000 people in 2,700 stores in thirteen countries. Its brands also include Castorama, Darty, Comet and Superdrug.

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See also:
15 Jun 99 |  The Company File
The secret of Wal-Mart's success
14 Sep 99 |  The Company File
Kingfisher profits jump
11 Jan 00 |  Business
Kingfisher leads retail share dive

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