Merrill Lynch is understood to be working with Bhs, the UK retail group owned by entrepreneur Philip Green, which is considering a hostile takeover of fellow UK retailer Woolworths.
Woolworths and Bhs were in talks for several weeks, but Woolworths has now terminated them. Woolworths said in a statement that the discussions were "exploratory", and that its board believed that the priority should be for it to implement its recovery plan. "The board does not believe that such a merger, with its attendant risk and uncertainties, would be in the best interests of shareholders. Accordingly, Woolworths has terminated the talks," said the statement.
