Credit Crunch Derails UK Carpetright Takeover

United Kingdom, December 26, 2007--Carpetright's chief executive, Lord Harris of Peckham, has scrapped his potential takeover of the UK retailer because of funding woes related to the U.S. subprime mortgage problems, according to the BBC.

In October, an investment group led by Harris agreed to buy the chain in a deal worth about £850m.

But since then, the credit markets have seized up on continued fears that banks have yet undisclosed US subprime debt losses sitting on their books.

This has made the cost of borrowing much more expensive, hurting deals.

Harris said that the turmoil in the financial system had dented the economic outlook and thus the "availability of funding and cost of capital."

"As a result, the consortium has been unable to secure the necessary level of funding on satisfactory terms for the purposes of the offer and hence has concluded that it is not in the interests of its stakeholders to continue discussions," he said.

The £12.50-a-share proposal had been a big support to Carpetright's share price over the past few months while the chain suffers from a general consumer malaise.