UPDATE 1-Theo Paphitis pulls out of Woolworths talks

* Paphitis says couldn't reach deal with administrators

* Talks between other suitors and administrators continue

* Supermarket interest limited

(Adds detail)

LONDON, Dec 4 (Reuters) - British entrepreneur Theo Paphitis said on Thursday he had pulled out of the running to buy Woolworths' (WLW.L) sweets-to-DVDs retail business, but talks between the administrators, Deloitte, and other suitors are continuing.

"It is with disappointment that I confirm that we could not reach a deal," Paphitis, famous for his role on BBC Television's Dragons' Den, said in a statement.

"My vision was that we could retain the Woolworths brand name through purchasing a large share of the existing retail business ... Unfortunately, the constituent parts of Woolworths are more valuable than the whole," he said.

Paphitis noted that the location of many of Woolworths' 815 stores made them attractive for many larger format retailers such as supermarket chains.  Continued...