Sir Tom Hunter has abandoned his long-running pursuit of Flying Brands, the struggling postal retailer of flowers and other garden products.

Sir Tom bought a 29.9 per cent stake in Flying Brands in November 2006 through his West Coast Capital vehicle – acquiring the maximum number of shares that he could buy without being forced to buy the whole company.

In August, Sir Tom, who made his multimillion-pound fortune in retailing, was revealed to be in talks to buy the rest of the company. However, both parties said in statements yesterday that they had been unable to reach agreement on the terms of any bid and the talks had been terminated.

Sir Tom declined to comment, but sources close to the Scottish entrepreneur said that the two sides could not agree on price. “Some of the shareholders had exorbitant thoughts about price and what their shares are worth. We wanted to look at it, but we are not going to entertain ridiculous premiums,” the source said.

Flying Brands, which is based in Jersey, issued a profits warning in September, blaming poor weather for reduced demand for its gardening products. Earlier the company had scrapped its interim dividend and closed down its greetings card business. Its present market capitalisation is £9.2 million.

Sources close to Sir Tom said that he would wait until the retailer’s next trading statement to see whether the business had improved, but would start to get tough with the company if sales had not risen.

“At the moment, we support the management, but we’re not going to be a passive shareholders,” one source said. “If things aren’t going well, we’ll become active.”

Sir Tom, who has promised to give £1 billion to charity over his lifetime, already owns a number of businesses in the fast-growing garden centre sector, including Wyevale Garden Centres and Blooms of Bressingham. He was forced to sell his 29 per cent stake in Dobbies, another garden centre chain, to Tesco when the retailer won a takeover battle.

Garden centres were once thought to be recession-proof because of their appeal to older consumers, although Flying Brands’ poor trading suggests that this may not be the case with gardening products. The theory was that retired people on fixed incomes spent a disproportionate amount of their income on their gardens.

Sir Tom is one of a number of retail entrepreneurs who are close friends of Jon Asgeir Johannesson, the boss of the Icelandic conglomerate Baugur, which has stakes in British high street names such as Debenhams and House of Fraser. Baugur is still under pressure because of the collapse of Iceland’s banks, which were significant lenders to a number of its companies.

City sources have speculated that Sir Tom’s decision to abandon the Flying Brands deal is in part down to a reversal in his fortunes, which were also linked at one stage to the nationalised Icelandic banks.

However, Sir Tom has managed to steer clear of at least some of the carnage now affecting Iceland’s banking system. He moved away from companies linked to the country’s banks, including XL Leisure, the bankrupt travel group, before the crisis hit.

Sir Tom also sold down his holding in Booker, the food distribution group, this year. He still owns the freeholds of Merlin, the entertainment group, and the 120 pubs owned by Spirit Group.

The entrepreneur made his initial fortune building the Sports Division retail chain, which he eventually sold to the rival JJB Sports for about £300 million in 1998. He set up West Coast Capital in 2001 and since has invested in a series of retailers.

Retail range

- Flying Brands was launched in 1981 and floated in 1993. It started out growing carnations on Jersey for tourists, but was transformed into a home-shopping business

- In 1995 the company bought DPA Direct, out of which it built Gardening Direct. The group has about five million customers listed

-Flying Brands owns Benham, the collectables business focused on stamps’ first-day covers and coins, Listen2, a retailer of audio books and CDs, and Garden Bird Supplies

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