Matalan and Tesco Merger Rumour Played Down

Reports that discount retailer Matalan and supermarket giant Tesco have held merger discussions have been firmly played down by both companies. Matalan shares rose sharply on Monday, up 3.2 percent to 211p, following a report in the Mail on Sunday which said the two retailers had been held talks until early this year, which could now be resurrected.

Neither company commented directly on the report, but news agency Reuters quoted 'sources familiar' with Matalan which said "John Hargreaves and Terry Leahy have never met." Hargreaves, founder of Matalan, was said by the report to want to retain control of the business, while other members of the family are reported to be keener to explore a sale. Matalan was also recently linked to interest from Asda owner Wal-Mart, which is trialing stand alone clothing stores using the George brand.