However, the deal would make sense as Smiths is Menzies’ main rival and is selling off several businesses to concentrate on its core high street chain and its news distribution operation.miths will announce today the sale of its The Wall music stores in the US to American group Camelot for pounds 28m. Last week it agreed to sell its Waterstone’s books business to a consortium headed by Tim Waterstone for pounds 300m. It also intends to sell its stake in Virgin Our Price, the music retailer.The purchase of the 232 John Menzies stores would strengthen Smiths’ position on the high street and increase its market share in its preferred markets such as books and stationery. It could achieve cost savings via the closure of the group’s head office and synergies through greater buying power.However, such a deal might run into competition problems because of the powerful positions of the two retailers in the newspaper and magazines markets. Forbouys and T&S Stores may also be interested.
WH Smith would not comment on any possible interest in John Menzies saying it was simply “market rumour”.

There was speculation yesterday that the other bidders could include WH Smith as well as retailers from continental Europe. Alchemy, the venture capital group, was front runner to buy the chain in a deal worth around pounds 55m. However, it is understood that the sale has been delayed by two rival suitors which have come in with higher offers. It seems clear that the future of Jan Leschly, chief executive of SmithKline, and Sir Richard Sykes, chairman of Glaxo, will be called into doubt if they cannot give dispel the feeling among many institutions that the collapse of the merger had more to do with a clash of egos than management culture.”If they cannot give us a good reason why this deal broke down we could call on the non-executives to assert their authority and maybe we could still get a merger,” said one shareholder. RIVAL BIDDERS including WH Smith are thought to have entered the fray for the retail business of John Menzies which was put up for sale in January. But I have to accept the conclusion that we no longer need a chief executive.”Outlook, page 21. SmithKline Beecham faces an uphill struggle to convince its shareholders that it should remain independent in the wake of the collapse of merger talks with fellow drugs giant Glaxo Wellcome.

A number of fund managers yesterday called on the group to seek other merger partners to recoup the value lost from the termination of the Glaxo deal.
Meanwhile, Glaxo Wellcome is to continue to lobby its shareholders to support a no-premium bid for SmithKline, despite the fact that institutions are divided on the merits of such a deal, it emerged yesterday.Several large institutional shareholders are willing to support such a hostile bid, but others believe the potential obstacle of writing off pounds 45bn of goodwill which could result from a takeover is too much to overcome.Glaxo has ruled out the idea of offering a large premium for SmithKline after an outcry from some of its largest shareholders which have indicated they would resist such a move. They are against such a bid as it will destroy much of the extra value that could result from a merger.Glaxo’s advisers are understood to be confident they can overcome the goodwill problem by structuring the deal to avoid liabilities.Another idea suggested by investors would be to produce separate accounts, one stating the “clean” underlying earnings figures and another including the effect of goodwill write-offs.”We want our pounds 15bn of value back and we will consider any way to get it,” said one shareholder in both SmithKline and Glaxo. However, other institutions believe all hopes for a deal are dead.. Both companies face a testing time over the coming weeks in their attempts to justify the breakdown in talks. Asked why he had effectively worked himself out of a job, Mr Cushing said: “When I took over I expected to be in charge for many years. And analysts said that a flotation may not be necessary, as Inchcape might be able to sell the businesses to trade buyers.Inchcape’s board first discussed splitting the company up last year, after deciding to concentrate on the main motor distribution operations.