Retailer fashions bid to buy Mk One

Icelandic group Baugur is to add Mk One to its shopping basket of UK retailers in a deal worth £55m (€78.5m).

Baugur has agreed to buy the 176-strong chain of budget fashion stores from a trio of business people that includes billionaire Bhs owner Philip Green.

The deal is the latest in a series of raids on the UK high street that has seen Baugur snap up chains such as Oasis, Karen Millen, Goldsmiths and Coast.

Media reports have previously linked the group to a bid for Principles and Warehouse owner Rubicon, while Baugur is locked in takeover talks withIceland-to-Booker group Big Food.

Mk One is positioned in the value end of the clothing market, targeting women in the 15 to 35 age bracket, while its Sophie brand sells to girls aged between 7 and 15.

In spite of competition from supermarkets and high street rivals in discount fashion, Mk One reportedly made profits of £15m (€21.4m) on sales of £139m (€198.4m) in its last financial year.

A Baugur spokesman confirmed that the deal is expected to be signed in the next few days, with the group taking a stake of up to 50% in Mk One and the remainder held by a new management team and Icelandic bank Landsbanki.

The deal will herald a windfall of £44m (€62.8m) for Mr Green, Mk One managing director Elaine McPherson and managing director David Thompson.

The remaining £11m (€15.7m) element of the acquisition would cover existing debt.

Mr Green, who also owns the Arcadia group of companies and wanted to buy Marks & Spencer earlier this year, holds a 10% stake in the business and will receive more than £4m (€5.7m).