Debenhams in merger talks

Debenhams is understood to be in talks with several European retailers about the possibility of a merger, in an attempt to lift the department store group's ailing performance.

The retailer is thought to have made approaches to a number of retailers, including upmarket French department store Galeries Lafayette, KarstadtQuelle in Germany and Italy's La Rinascente.

Last month, KarstadtQuelle chief executive Thomas Middlehoff said he hoped to merge with another retailer in the next 18 months. The German company, which operates 90 department stores and 32 other shops, is understood to be considering floating on the London Stock Exchange.

According to sources, Debenhams chief executive Rob Templeman is very keen to exit the troubled business. Since its flotation last year, the group has been struggling, after more than two years of private equity ownership.