EDINBURGH Woollen Mill has sold its parent company Langholm Dyeing to

a subsidiary of the Leeds Group in a deal which could be worth #5m, and

the sale marks a parting of the ways for the Stevenson brothers, sons of

the founder.

Leeds Dyers will make an initial payment of #2.9m with a further #1m

to be paid within two years, and an additional #1.2m could become

payable if agreed profit levels are achieved.

EWM Investments and Edinburgh Woollen Mill, joint owners of Langholm,

are private companies 95% owned by the Stevenson family. The companies

have a turnover of #45m from spinning and weaving mills in Selkirk,

manufacturing facilities in East Kilbride, and 125 retail outlets

throughout the UK.

Langholm was founded in 1946 by Andrew Stevenson, father of the

present Edinburgh Woollen Mill managing director, David Stevenson, under

whose direction the company has grown from having 25 employees and a

turnover of #80,000 in 1966 to its present size.

The technical side of the business has been looked after since the

late 1960's by another son, Neil Stevenson, who studied dyeing at

Bradford University and one of the principal shareholders in EWM

Investments and managing director at Langholm.

He will continue in his post for an initial period of three years and

is to join the Leeds board as an executive director. He will also

continue as a board member of EWM Investments, but will relinquish his

position on the company's retail board. Langholm, with 100 employees

involved in dyeing and merchanting operations in a freehold Borders

factory, made a pre-tax profit of #720,000 in the year to January 31.

''It seems that the child has now outgrown the parent,'' said John

Schofield, company secretary at Leeds Group, which reported profits of

#3.4m, down from #4.8m last year on a turnover of #27.5m (#29.1m).

Deteriorating conditions in the economy generally and in the retail

sector in particular were blamed for the setback, although export

business benefited from the weaker pound.

Langholm, which supplies fabric producers throughout the UK, with less

than 5% of sales being to the EWM group, will compliment Leeds' existing

yarn dyeing operation which has been the fastest growing division during

recent years.

In addition to the dyeing business, Leeds is to acquire PD Yarns

(Langholm), the related yarn marketing business, and EWM group will

receive #5m in cash, a loan note for #1m, and 200,000 new Leeds shares

as the initial payment for both companies.