The Gormenghast-like Barclay twins, Sir David and Sir Frederick, are today roasting a serf or two on their private island fastness in celebration of the acquisition of Choice, GUS and all other home shopping catalogue brands - bar Argos - from retail conglomerate GUS plc.
The deal, worth £590 million ($966.68m; €820.70m), was cemented over the holiday weekend [WAMN: 27-May-03] and the inking followed Tuesday as predicted – although eyebrows across the City of London soared skyward at the price paid. Said one entrail-raker, Evolution Beeson Gregory’s Nick Bubb: “I am amazed about the price. It is double what I expected. That a trade buyer has bought it, despite the fears of it being blocked, is quite surprising.”
The trade buyer is Littlewoods, hitherto GUS’ most deadly rival and acquired by the Barclay brothers last year. Between them the pair now bestride Britain's catalogue market to an extent that cannot be overlooked by the Office of Fair Trading or the Competition Commission.
The consensus among observers is that the Barclays have taken a dangerous gamble, committing an irretrievable £450 million in cash to the purchase whatever the outcome of any anticompetitive inquiry – and without conducting prior soundings with either regulator.
The twins’ home shopping lieutenant, Littlewoods chairman David Simons, wrote yesterday to the OFT undertaking to keep the businesses apart until a decision is forthcoming. The latter can decide to approve the deal or refer it to the Competition Commission for fuller investigation. According to City law firm Herbert Smith: “There is a real risk that this could get referred.”
Two arguments that will figure powerfully in the case against merger are (1) the large-scale job losses that will inevitably follow; and (2) Littlewoods/GUS will control nearly seventy per cent of parcel deliveries to UK homes with potentially serious consequences for the domestic postal system. GUS already operates its own delivery service, White Arrow.
Data sourced from: Times Online (UK); additional content by WARC staff