The planned merger of Front Street giants Trimingham's Brothers Ltd. and HA & E Smith was scrapped yesterday at the eleventh hour as financing to secure the deal failed to materialise.

The two companies issued a joint Press release saying that, although shareholders from each had worked hard to bring the businesses together, they "regret that they're unable to complete the transaction".

"The two companies have concluded discussions amicably and wish each other the best for the future," the release continued.

There was disappointment on all sides with the collapse of the deal, which was to have been completed earlier this month.

Trimingham's president Lawrence Trimingham said, while he could not comment on the financing problems in detail, the company had had every reason to believe that the money was going to be in place.

"It's really a complicated transaction and to begin with," he told The Royal Gazette. "We had relied on financing for the transaction to take place. We thought that financing was in place. But in the end it wasn't."

Mr. Trimingham would not comment on whether the company had sought financing from outside the Island in pursuing the purchase of its retail rival, Smith's.

The companies announced last month in a joint Press conference that Trimingham's had bought out Smith's for an undisclosed sum.

The combination of the two shops would have created a huge retail complex spanning three buildings along Queen and Front Streets.

"We were both very interested in doing this transaction," said Mr. Trimingham of the collapse of the deal. "Both parties firmly believed that it would be in the best interest of everyone involved and Bermuda shoppers and the general public."

He said he did not know what effect this would have on local consumers but that he believed the retail merchants must change to meet future market demands.

In terms of the chain's 240 staff members, however, Mr. Trimingham said it would be business as usual. "In the end, nothing changed," he said. "Nothing actually took place and there was no staff movement or business changes."

Smith's director Stephen Kempe expressed similar disappointment that the deal - four years in the making - was in shards.

"We are very disappointed the transaction did not go ahead," he said. "As for why? Well that's really a question you will have to put to Trimingham's. It became apparent earlier this week that the transaction was not going to go ahead."

But, he said, it was very much the intention of Smith's to continue to operate independently.

"By all means, we are still very much in the retail trade and will remain the retail trade," Mr. Kempe told The Royal Gazette. He said the department store, which employs 106 people, was not considering any other possible partnerships "at the moment".

"I think it would have been a very good arrangement and good for both parties," Mr. Kempe said.

The merger was planned to have taken effect from early September - with Smith's retaining their real estate through a leasing arrangement with Trimingham's.

While neither company would reveal the intended sale price, Smith's president Roger Davidson said at a Press conference announcing the merger in July that Trimingham's had paid more than they wanted to.

There is still a possibility that the combination of the two retail outlets might take place in the future, however.

Mr. Trimingham would not rule out the possibility.

"Who knows what the future will bring," he said, adding that both parties were still interested.

"I think to stay the same is, in the long run, not ideal," he said. "Who knows what opportunities might come up."